The price of Bitcoin (BTC) exceeded $ 34,700 to reach a new record after a strong overnight rally. Ether (ETH), the original cryptocurrency of the Ethereum blockchain, also exceeded $ 800 for the first time since May 2018.
The sudden rally of Bitcoin comes as a surprise as it sharply corrected to around $ 30,300 on January 2nd. BTC rose within 24 hours from $ 30,300 to as high as $ 34,778, a decline of 14%.
What caused the Bitcoin and Ethereum rally?
When the price of Bitcoin exceeded $ 33,000 on January 2, some whales and investors with high net worth warned that a 150 BTC sell order could track the market.
A pseudonymous Bitcoin trader known as “i.am.nomad” wrote:
A sale of 150 btc will repeat the whole thing. The higher the price goes, the more prices get prizes, the lower the support will be. ‘
BTC fixed the risk of a Bitcoin correction due to thin order books within hours, and BTC withdrew sharply.
However, Bitcoin recovered quickly after the initial decline and rose to a new record high within 24 hours.
The main catalysts behind Bitcoin’s rally were the institutional buildup of BTC on Coinbase and the brief pressure on Binance Futures.
Over the past three days, Bitcoin has been trading much higher on Coinbase than on other major exchanges, as Cointelegraph reported.
This means that aggressive buyers on Coinbase are constantly accumulating BTC despite the premium.
Meanwhile, many traders on Binance Futures have fallen short on BTC, possibly expecting Bitcoin to fetch around $ 30,000. As Coinbase buyers continued to push BTC upward, a brief push occurred. Analysts at Santiment explain:
‘For those who expect a #Bitcoin fix to begin in 2021, the $ 34,000 #AllTimeHigh achieved 10 minutes ago shows how painful it has been to be a $ BTC bear over the past ten months. Gem. trader yields have not been as high since June 2019. ”
Ether’s price has risen from the strong technical momentum of Bitcoin. ETH / USD rose more than $ 800 for the first time since early May 2018, showing new momentum after stagnating during December.
A pseudonymous cryptocurrency trader, known as ‘Mayne’, said before the Ether meeting on January 2 that ETH is likely to rise to $ 800. He said:
‘ETH thesis is still on track, daily to $ 620, we will rise to $ 800. I built a big long position in December and accept that ETHBTC can hold a higher low, I think it will play well. I should have had more BTC exposure to ETH in December, hoping ETH would be better than Jan performer. ”
What happens next?
Ethereum has another major catalyst on the horizon as the CME futures exchange plans to launch ETH futures contracts in February.
Given the high level of institutional demand for Bitcoin since the first quarter of 2020, demand may also increase Ether on the listing.
Meanwhile, Bitcoin remains on an upward path of price discovery and daily new record highs. With an alleged shortage of stock and an institutional buying frenzy now spreading in retail, the rally could have much more room to run, with probably $ 35,000 breaking the next psychological level.
As Cointelegraph reported, six-figure predictions have become increasingly common over the past few months, especially as the rally has broken new highs of all time.