The price of Bitcoin ( BTC ) surpassed $ 34,700 to hit a new all-time high after a strong overnight rally. Ether ( ETH ), the native cryptocurrency on the Ethereum blockchain, also surpassed $ 800 for the first time since mid-May 2018.
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Bitcoin’s sudden rally comes as a surprise because it sharply corrected to around $ 30,300 on January 2. In 24 hours, BTC surged from $ 30,300 to $ 34,778, a 14% bounce.
What triggered the Bitcoin and Ethereum rally? When the price of Bitcoin surpassed $ 33,000 on January 2, some whales and high net worth investors warned that a 150 BTC sell order could push the market back.
A pseudonymous Bitcoin trader known as “i.am.nomad” wrote :
“A market sale of 150 btc would set all this back. lmao, the higher the price, the more retail prices they get, the lower the supply support. “
Within hours, he pointed to the risk of a Bitcoin correction due to the order books, BTC pulled back sharply.
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However, Bitcoin rebounded quickly after the initial drop and hit a new 24-hour high.
The main catalysts behind Bitcoin’s rally have been the institutional accumulation of BTC on Coinbase and the throttling of short positions on Binance Futures .
How massive Bitcoin buyer activity on Coinbase propelled the price of BTC to over $ 32,000
Over the past three days, Bitcoin has traded 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 tops $ 34,000 with average returns from traders at highs. Source: Santiment
Meanwhile, many Binance Futures traders were “shocking” (shorting) BTC, possibly expecting Bitcoin to peak at around $ 30,000. As Coinbase buyers continued to push BTC higher, there was a short squeeze. Santiment analysts explained :
“For those hoping for a #Bitcoin correction to start in 2021, the #AllTimeHigh of $ 34,000 achieved 10 minutes ago shows how painful it has been to be a $ BTC bearish in the last 10 months. The average return for traders has not been that high across the board since June 2019. “
The price of Ether rose thanks to strong technical momentum from Bitcoin. The ETH / USD pair rose above $ 800 for the first time since early May 2018, showing renewed momentum after stalling throughout December.
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A pseudonymous cryptocurrency trader known as “Mayne” said on January 2 before the Ether rally that ETH is likely heading for $ 800. He said :
“The ETH thesis is still underway, close to USD 620 daily we are heading towards USD 800. I built a great long position in December and assuming $ ETHBTC can hold a higher low, I think it will work well. I should have had more long exposure of BTC to ETH in December, expecting ETH to top in January. “
What comes next? Ethereum has another major catalyst on the horizon, as futures exchange CME plans to launch ETH futures in February .
Ethereum reaches its maximum price in 2020. Considering the high level of institutional demand for Bitcoin since Q1 2020, the demand could also boost Ether after the launch.
Meanwhile, Bitcoin remains on an upward trajectory of price discovery, hitting new all-time highs on a daily basis. With a purported supply shortage and institutional buying frenzy now spreading to retail, the rally may still have much more room to run, with $ 35,000 likely the next psychological level to break.
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As Cointelegraph reported , six-figure predictions have become increasingly common in recent months, especially as the rally has broken new all-time highs.