On-chain analytics company CryptoQuant has explained why bitcoin and ethereum appear to be on the path to acceleration recently.
bitcoin and ethereum Look Bullish on On-Chain Metrics
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The first two metrics of interest here track demand from permanent holders and whales. First, here are the relevant charts for btc:
As you can see above, demand from permanent holders, or HODLers, had been declining after peaking in March, but recently, the metric has seen a shift. These investors added 70,000 btc to their wallets over the last month.
A similar trend has also been observed in whale holdings, generally defined as addresses containing more than 1,000 btc. According to the analysis firm, monthly demand from these large investors has increased by 4.4%.
CryptoQuant has also revealed that the sector is experiencing an influx of potentially new capital, as “new whales” have seen their recently realized limit soar.
The Realized Cap measures the amount of capital that a particular investor group uses to purchase their bitcoin. Therefore, the increase in the realized limit of new whales, which are whale entities that entered in the last 155 days, would represent the new demand from large investors entering btc.
As the charts above show, the pattern in this metric was similar this year to that seen in 2020. That year's demand led to the 2021 bull run.
Now, here is what the trend in permanent holder inflows and whale balance has looked like for ethereum:
As the charts show, demand for ethereum from these investor groups has skyrocketed since the approvals of spot exchange-traded funds (ETFs) last month.
Permanent holders are now bringing in an average of 40,000 eth per day, while whales, investors who own between 10,000 and 100,000 eth, have increased their holdings to record levels of around 16 million eth.
While the signs have been positive for bitcoin and ethereum in terms of direct demand, there is one development that may be detrimental to the cryptocurrency sector as a whole. It is the slowdown in the growth of stablecoins.
The chart shows that the market capitalization of Tether (USDT) grew considerably during the rally towards bitcoin's all-time high. While the largest stablecoin is still receiving capital injections, its demand has slowed.
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Historically, stablecoins have been one of the entryways for capital into the sector, so consistent demand for them may be necessary to achieve sustainable rallies.
btc Price
At the time of writing, bitcoin is trading at around $70,200, up more than 4% over the past week.
Dall-E Featured Image, CryptoQuant.com, TradingView.com Chart