Market Times:


New York:


Bitcoin Is on Its Way to Acceleration Mode: CryptoQuant

The surge in demand from several cohorts of BTC holders is usually correlated with higher prices.

Bitcoin green

On-chain experts are seeing signs that bitcoin (BTC) may soon experience a major and sustained price rally.

These signs include a recovery in demand for the cryptocurrency, large inflows from new investors, and a significant uptick in the purchase of spot Bitcoin exchange-traded funds (ETFs) in the United States.

Bitcoin is Set For a Rally

According to a report by on-chain analytics platform CryptoQuant, the BTC demand growth from large investors and permanent holders has begun to accelerate again after witnessing a slowdown in March. Demand from Bitcoin whales is growing at a monthly rate of 4.4%, its fastest pace since April 20. Permanent holders have accumulated over 70,000 BTC in the last 30 days, the largest increase since late April.

“Indeed, large investors are adding about $1B into Bitcoin, paralleling 2020 before the rally from $10K to $70K. Back in 2020, Bitcoin hovered around $10k for 6 months with high on-chain activity, later revealed as OTC deals. Now, despite low price volatility, on-chain activity remains high, with $1B added daily by new whale wallets, likely in the form of Bitcoin purchases from institutional investors entering into custody wallets,” CryptoQuant analysts stated.

Besides whales, permanent holders, and large investors, the U.S. spot Bitcoin ETF market has witnessed a surge in demand, with the total holdings of the issuers rising from 819,000 on May 1 to over 859,000 at the time of writing. These entities have been seeing huge daily inflows and have been on an 18-day inflow streak since May 13.

CryptoQuant said this surge in demand from several cohorts of BTC holders is usually correlated with higher prices. With demand rising, prices are bound to follow soon. Bitcoin appears to have caught the wave already, as it is up 4.4% in the past week and was trading at $71,300 at press time.

BTC Selling Pressure Declines

The accelerating demand from Bitcoin investors comes as selling pressure from traders declines due to exhaustion from taking profits. Analysts expect much lower selling pressure in the near term as unrealized profit margins are currently low compared to early March when they soared to 69%.

Meanwhile, ether (ETH) is considered to be on the same path as BTC. The crypto asset has also seen a spike in demand since U.S. regulators greenlit applications for spot Ethereum ETFs on May 23.

Cynthia Ezirim

Cynthia Ezirim is a news reporter at Cointab who is passionate about Bitcoin, non-fungible tokens, and decentralized technology. She joined the crypto space in late 2022.