Big Week for Bitcoin and Ethereum — The Largest Coins Experience a Strong Price Surge
However, that might not necessarily be true for members of the crypto industry. 2020 has been a big year for crypto, with a lot of positive development.
Apart from the growing adoption — particularly among the institutional investors, where the interest has never been higher — the crypto sector saw numerous improvements. The DeFi sector exploded in 2020, giving way to hundreds of DeFi projects and protocols.
Bitcoin proved its usefulness in times of crisis, fairing better than any other asset during the COVID-19 pandemic.
And, in the past 7 days, Bitcoin and Ethereum alike saw extremely positive price movement.
Bitcoin hits a new all-time high
Last Saturday, December 12th, the price of Bitcoin started growing again, climbing from mid-$18,000. Over the weekend, the price reached $19,300, which is where a very strong resistance blocked its way further up.
While this would have been exciting development two months ago, BTC has reached similar levels several times in the past month and a half, and its price ended up continuously rejected.
However, this approach was somewhat different. The price did not saw rejection right away. Quite the opposite, in fact — it stuck close to its resistance for days, until early Wednesday, when it managed to break it.
After the $19.3k level was broken, the price shot up, breaking through the $20k barrier without even feeling it.
It barely slowed down after reaching $21k, although this resistance got broken rather quickly, as well. The next resistance at $22k put up even less of a fight, and before investors knew what was happening, Bitcoin managed to make a brand new all-time high at $23,642.66 on Thursday, December 17th, 2020.
BTC price was finally rejected after hitting this level, as a strong resistance continues to block its way. Fortunately, however, the price encountered a very strong support at $22,500, and this level kept it from spiraling further down.
Bitcoin attempted to go up two times since Thursday, but it was stopped both times by the $23k level. So, the coin spent the last two days fluctuating between $22.5k and $23k, once again seemingly stuck in a $500-wide belt.
The Bitcoin surge was not triggered by any particular event, as far as it is known. Rather, events from earlier this year, such as increased interest by institutional investors, PayPal adding support for BTC in the US and announcing it elsewhere, and BTC scarcity caused by the mid-May Bitcoin halving, all created a great demand for the coin.
Finally, the fact is that the coin hit a new ATH on December 17th, while the last one took place on December 21st. In other words, BTC was only four days early from making a new ATH exactly three years after the previous one. Of course, it is possible that it will surge even higher in days to come, and make a new ATH exactly three years after the one in 2017.
Ethereum on the rise
Similarly to Bitcoin, Ethereum also saw a considerable price increase over the past seven days. Unfortunately, ETH price did not go up enough to allow the coin to hit a new ATH.
No, Ethereum has not climbed even halfway to its old ATH of $1440. However, it was a big participant in the Bitcoin-led rally that dominated this week.
Like Bitcoin, Ethereum’s price surge started last Saturday, when the coin sat just below a strong resistance level at $560. After the rally had started, the coin surged past this level, going all the way up to $590. Its progress was stopped by the resistance at $600, just as Bitcoin’s was at $19,500.
Both coins then surged past their major resistances simultaneously, with ETH hitting its YTD high at $673, just as Bitcoin was making its new ATH on December 17th.
The two coins’ charts are extremely similar. After reaching this height, ETH also dropped like BTC, but it was stopped by its own strong support level at $640. Meanwhile, a resistance at $660 is stopping it from going further up, and so ETH got its own belt, with upper and lower barriers that are keeping it contained.
Obviously, ETH has shown an extreme correlation with BTC, but the correlation is not all that the coin has going for it. Ethereum has recently concluded Phase 0 of its Ethereum 2.0 launch, and Phase 1 had officially started on December 1st.
The coin’s upgrade will be a lengthy one, and it will take quite some time to fully shift to a new, safer, and more scalable version. However, Ethereum has finally embarked on a long-awaited journey, which has renewed many investors’ faith in the project.
Not to mention that DeFi, which went huge this year, was born on Ethereum, and the second-largest crypto project is still the most dominant platform for DeFi project development.
What will happen with BTC and ETH next?
With this week being a massive success for Bitcoin and Ethereum, many are now waiting to see how will this all play out.
Most people are bullish on Bitcoin, as they expect the coin’s price to skyrocket to even greater heights. After all, historical data suggests that BTC typically surges quite a bit several months after going through one of its halvings.
There are some who disagree with this, noting that the two are unrelated, and that Bitcoin moves in cycles, with the fact that growth comes after halving being only a coincidence.
Others expect the coin to experience a major correction, which may pull it down to some lower levels, potentially even cutting its price in half. While this might be a possibility, the demand for the coin is higher than ever, and so is BTC price, as the new bull run that was awaited since 2018 is finally starting.
As for Ethereum, the coin is still tied to Bitcoin itself, and it is unlikely that it will decouple from it anytime soon. For now, most would be pleased to see ETH reach even half of its ATH.
But, there is no doubt that ETH has a lot of potential, and that it will likely start attracting even more traders as it progresses towards Ethereum 2.0.
Konstantin Anissimov, Executive Director at CEX.IO