Recent on-chain data and market analysis indicate that the current upward momentum for Bitcoin and Ethereum may be far from over. Increased accumulation by long-term holders and substantial inflows from institutional players are providing strong support for both assets, signaling a robust foundation for continued growth.
Key Drivers Behind the Current Market Rally
The ongoing price recovery in the crypto market is largely fueled by growing confidence among major investors and a noticeable shift in holding behavior. Data from leading analytics firms suggests that both Bitcoin and Ethereum are experiencing heightened demand from strategic buyers.
Sustained Bitcoin Accumulation by Long-Term Holders
Permanent Bitcoin holders have significantly increased their acquisitions over the past month. In the last 30 days, these investors accumulated approximately 70,000 BTC, marking the largest spike since late April. This trend indicates strong conviction in the long-term value of Bitcoin, despite short-term market fluctuations.
Moreover, new large-scale Bitcoin investors are entering the market with substantial capital. Daily inflows from these entities have reached around $1 billion, drawing parallels to the accumulation phase observed in late 2020, which preceded Bitcoin’s historic rally from $10,000 to $70,000.
Institutional Demand via ETF Investments
The introduction and approval of U.S. spot Bitcoin ETFs have opened a major channel for institutional capital. Since May 1, the total Bitcoin holdings across these ETFs have grown from 819,000 to 859,000 BTC. These products have become a significant source of consistent demand throughout the year.
At the same time, selling pressure from short-term traders has diminished. The average unrealized profit margin has reset to 0%, suggesting that most opportunistic selling has already occurred. This reduction in sell-side pressure creates a more stable environment for price appreciation.
Ethereum Gains Momentum After ETF Approval
The recent approval of spot Ethereum ETFs in the U.S. has triggered a notable shift in ETH market dynamics. Since May 20, permanent Ethereum holders have escalated their buying activity, averaging 40,000 ETH per day compared to just 5,000 ETH prior to the announcement.
Large Ethereum investors have also increased their positions, with total holdings now reaching 16 million ETH. This is up from 15.4 million before the ETF approval and significantly higher than the 14.9 million recorded at the beginning of 2024.
This upward trend in accumulation reflects growing institutional and high-net-worth investor confidence in Ethereum’s future performance. For those looking to monitor these trends more closely, you can explore real-time market analytics for deeper insights.
A Note of Caution: Stablecoin Liquidity Growth Slows
Despite the positive indicators for Bitcoin and Ethereum, one critical factor remains a concern. Stablecoin liquidity, which is essential for sustaining broader market rallies, has not yet resumed a strong growth trajectory.
The market capitalization growth of Tether’s USDT, the largest stablecoin, has continued to slow. Its current growth rate is the lowest since February 11, which may pose a challenge if not reversed. Stablecoin liquidity often acts as fuel for crypto market expansions, and its stagnation could temper the pace of future price increases.
Frequently Asked Questions
What is driving the current Bitcoin price rally?
The rally is primarily driven by increased accumulation from long-term holders, large investor inflows, and consistent buying through spot Bitcoin ETFs. These factors have reduced selling pressure and built a solid demand base.
How has the Ethereum ETF approval affected its price?
Since the approval, permanent holders have significantly increased their daily ETH purchases. Large investors have also raised their holdings, reflecting stronger institutional confidence and anticipation of further price gains.
Why is stablecoin liquidity important for crypto prices?
Stablecoins provide the liquidity needed for trading and investing across crypto markets. When stablecoin growth slows, it may limit the capital available for purchasing assets like Bitcoin and Ethereum, potentially restraining price rallies.
Should investors be concerned about the slowing USDT growth?
While not an immediate red flag, slowing stablecoin growth warrants attention. It may signal reduced incoming capital flow, which could affect the sustainability of the current market uptrend if it persists.
What is the significance of unrealized profit margins resetting to 0%?
This indicates that most traders who bought at lower prices have already sold their positions, eliminating a major source of selling pressure. This often creates favorable conditions for price stabilization and future increases.
Are we in a similar accumulation phase as in 2020?
Current on-chain data shows similarities to the late 2020 accumulation period, where large investors entered the market before a major bull run. However, market conditions always vary, and past performance is not a guaranteed indicator of future results.