Big investments from major holders and institutional investors have buoyed Bitcoin and Ethereum prices, fueling a broader-market recovery. A CryptoQuant report highlights this surge as a key driver for a steady price rally in the crypto market.
The report discusses several key factors contributing to the rise in Bitcoin demand. Firstly, there has been faster growth in the total balances held by permanent holders and large investors. In the past 30 days, permanent Bitcoin holders have accumulated 70,000 Bitcoin, marking the largest increase since late April.
Per CryptoQuant analysts, daily inflows from new large Bitcoin investors have reached $1 billion, paralleling the massive accumulation period seen in 2020 before Bitcoin’s rally from $10,000 to $70,000.
Furthermore, there has been an increase in Bitcoin purchases from spot ETFs in the US, with total holdings rising from 819,000 on May 1st to 859,000 currently.
CryptoQuant said that these purchases have been a meaningful source of demand this year. Moreover, selling pressure from traders has subsided, with the unrealized profit ratio resetting to 0%. This indicates that heavy selling by traders has been exhausted.
The on-chain data analytic firm’s report reveals that Ethereum's demand has also increased since May 20, subsequent to the approval of spot ETH ETFs in the US. The daily purchase of ETH from permanent holders has averaged 40,000 ETH post-ETF approval, compared to 5,000 ETH before the announcement.
The report suggests that the total holdings of large ETH investors have also increased, reaching 16 million ETH, up from 15.4 million before the ETF approval and 14.9 million at the start of 2024.
The report concluded that despite the positive trends for Bitcoin and Ethereum, stablecoin liquidity has yet to recover its growth trajectory, which is essential for underpinning a broader price rally.
CryptoQuant warns that the market capitalization growth of Tether’s USDT, a proxy for fresh liquidity in crypto markets, continues to decelerate, now growing at the slowest pace since February 11.