Bitcoin surpassed $34.8K to achieve a new all-time high of $34,812 after the crypto market experienced a strong overnight rally. Ether (ETH) which is the native crypto of the Ethereum blockchain also surged above $800 for the first time since May 2018.
The flagship crypto, bitcoin, went on the rampage breaking above $30,000 and then breaking barriers to creep towards $35K within hours. BTC rallied and caught many traders by surprise since it corrected steeply to about $30,300 on January 2. In 24 hours, BTC price soared from $30,300 to reach highs of $34,778 representing a 14% rebound.
Many believe that the crypto market has room for growth into 2021 and beyond.
What caused The BTC And ETH Rally?
When bitcoin exceeded $33,000, some of the whales and high-net-worth investors warned that a possible 150BTC sell order could retrace the market. “i.am.nomad” who is a pseudonymous BTC trader 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.”
Several hours later, he pinpointed the risk of a bitcoin correction as a result of thin order books. Bitcoin then pulled back sharply. Nonetheless, the crypto recovered rapidly after that drop and rallied to a new record-high within 24 hours. Interestingly, the institutional accumulations happening on Coinbase are a major catalyst behind bitcoin’s rally. Also, the short squeeze on Binance Futures fueled the rally on January 2.
Since the turn of the year, bitcoin has been trading much higher on Coinbase compared to the other major exchanges. It means that aggressive buyers on Coinbase were constantly accumulating bitcoin despite the premium.
Meanwhile, most of the traders on Binance Futures were shorting bitcoin may be expecting the crypto to peak at around $30,000. When the Coinbase buyers continued to push bitcoin upwards, a short squeeze happened. Santiment analysts 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 rallied on the back of Bitcoin’s strong technical momentum. The second biggest crypto also set records of its own. ETH/USD surged above $800 for the first time since early May 2018 which demonstrated renewed momentum after it seemingly stagnated throughout December. At the time of writing, ETH price has set a daily high of $923.
‘Mayne’, a pseudonymous crypto trader, said on January 2 before the Ether rally happened that ETH might head to $800. He stated:
“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 Comes Next?
Ethereum is believed to have another major catalyst on the horizon as the CME futures exchange plans to unveil ETH futures in February. Putting into context the massive institutional demand for bitcoin since Q1 2020, this demand may also boost Ether upon that listing.
In the meantime, bitcoin maintains its upside momentum in the interesting price discovery phase. The crypto is hitting new record highs daily. With the alleged supply shortage and a major institutional buying spree now spilling continuously into retail, the current rally may still have more room to run with $35,000 on the horizon being the next psychological level to break.
In recent months, six-figure predictions have become quite common as the rally sets new all-time highs. How high can bitcoin go, and will the entire crypto market follow?