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The price of Bitcoin (BTC) topped $ 34,700 to hit a new all-time high after a strong rally overnight. Ether (ETH), the native cryptocurrency of the Ethereum blockchain, also surpassed $ 800 for the first time since May 2018.
Bitcoin’s sudden rally comes as a surprise as it corrected sharply to around $ 30,300 on January 2. Within 24 hours, BTC rose from $ 30,300 to $ 34,778, a rebound of 14%.
What sparked the Bitcoin and Ethereum rally?
When the price of Bitcoin surpassed $ 33,000 on January 2, some whales and wealthy investors warned that a 150 BTC sell order could retrace the market.
A pseudonymous Bitcoin trader known as “i.am.nomad” wrote:
“A sale of 150 btc on the market would trace all of this. lmao the more the price rises, the more prices the retail trade obtains, the weaker the supply support will be. “
Within hours, he identified the risk of a Bitcoin correction due to weak order books, BTC fell sharply.
However, Bitcoin recovered quickly after the initial drop, hitting a new high in 24 hours.
The main catalyst for the Bitcoin rally has been the institutional build-up of BTC on Coinbase and the short push on Binance Futures.
Over the past three days, Bitcoin has traded significantly more on Coinbase than on other major exchanges, as Cointelegraph reported.
This means that aggressive buyers on Coinbase were continuously accumulating BTC despite the premium.
In the meantime, many traders on Binance Futures were selling BTC, perhaps expecting Bitcoin to hit around $ 30,000. As Coinbase buyers continued to push BTC higher, a short squeeze occurred. Analysts at Santiment Explain:
“For those expecting a #Bitcoin correction to kick off 2021, the #AllTimeHigh of $ 34,000 hit 10 minutes ago shows how painful it has been to be a $ BTC bear in the over the past 10 months. Avg. traders’ returns have not been as high across the board since June 2019. ”
The price of ether has recovered thanks to the strong technical momentum of Bitcoin. ETH / USD broke above $ 800 for the first time since early May 2018, demonstrating renewed momentum after stagnating throughout December.
A pseudonymous cryptocurrency trader known as “Mayne” said on January 2 ahead of the Ether rally that ETH was likely heading towards $ 800. he said:
“ETH thesis is still on track, daily close at $ 620, we would be heading towards $ 800. I built a big long position in December and assuming $ ETHBTC can hold a higher low I think it will go well. I should have had long exposure to BTC vs ETH in December, hoping ETH outperforms for January. “
What happens next?
Ethereum has another major catalyst on the horizon as the CME futures exchange plans to launch ETH futures in February.
Given the high level of institutional demand for Bitcoin since Q1 2020, demand could also boost Ether during listing.
Meanwhile, Bitcoin remains on an upward price discovery path, hitting new highs daily. With an alleged supply shortage and institutional buying frenzy now spreading into retail, the rally could still have a lot more wiggle room, with $ 35,000 likely being the next psychological level to be broken.
As Cointelegraph reported, six-figure forecasts have become increasingly common in recent months, especially as the rally has broken new all-time highs.
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