Ethereum tops $800 while Bitcoin’s elliptically surges towards $35K

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Bitcoin’s price topped $34.7k, propelling Ethereum to break past $800 after a quick overnight rally.

The price of Bitcoin (BTC) crossed $34,700 to reach a new all-time high following a quick overnight rally. Ether (ETH), the native cryptocurrency of the Ethereum blockchain, has crossed $800 for the first time after May 2018.

Bitcoin’s unexpected rally came as a surprise because it was dramatically corrected to about $30,300 on Jan. 2. Within 24 hours, BTC rose from $30,300 to as much as $34,778, a turnaround of 14 percent.

 

BTC/USD hourly candle chart (Bitstamp)

What triggered the Bitcoin and Ethereum rally?

When the price of Bitcoin surpassed $33,000 on Jan. 2, some whales and high-net-worth investors warned that a 150 BTC sell order could retrace the market.

A pseudonymous Bitcoin trader known as “i.am.nomad” wrote:

“A 150 btc market sell would retrace this whole thing. lmao the higher price goes, the more retail gets prices out, the lower bid support will be.”

Within hours he established the possibility of a bitcoin correction due to thin order books, BTC sharply pulled back.

However, after the initial decline, Bitcoin rallied rapidly, rallying to a new record-high within 24 hours.

The key catalysts behind the Bitcoin rebound is the institutional allocation of BTC on Coinbase and the short squeeze on Binance Futures.

Throughout 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 were continuously accumulating BTC despite the premium.

Bitcoin surpasses past $34K with average trader returns at highs. Source: Santiment

In the meantime, many traders on Binance Futures were shorting BTC, possibly expecting Bitcoin to top out at around $30,000. When Coinbase buyers continued to push BTC upwards, a short squeeze occurred. Analysts at Santiment explained:

“For those expecting a #Bitcoin correction to kick off 2021, the $34,000 #AllTimeHigh achieved 10 mins ago is showing how painful it’s been being a $BTC bear the past 10 months. Avg. trader returns haven’t been this high across the board since June 2019.”

Ether price tagged off Bitcoin’s strong technical traction. ETH/USD grew more than $800 for the first time since early May 2018, showing revived traction since stagnating during December.

A pseudonymous cryptocurrency trader known as “Mayne” said on Jan. 2 before the Ether rally that ETH is likely heading to $800. He said:

“ETH thesis still on track, daily close thru $620 we’d head to $800. I built a large long position in December and assuming $ETHBTC can hold a higher low, I think it’ll play out nicely. I should have had more BTC long exposure vs ETH in December, hoping ETH outperform for Jan.”

What happens next?

Ethereum has another major catalyst on the horizon as the CME futures exchange plans to launch ETH futures in February.

Considering the high level of institutional demand for Bitcoin since the first quarter of 2020, the demand could also boost Ether upon the listing.

Google searches for “Bitcoin.” Source: Google Trends

Meanwhile, Bitcoin continues on the upward curve of market discovery, reaching new record highs every day. With the supposed supply crisis and institutional buying spree now spilling over into retail, the rally might still have a lot of space to go, with $35,000 likely to break the next psychological mark.

As Cointelegraph reported, six-figure predictions have become increasingly common in recent months, particularly as the rally has broken new all-time highs.

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