Despite some positive developments in the digital asset market, CryptoQuant, an analytics firm, believes that there is still one crucial element missing to drive a sustained price rally.
According to CryptoQuant, there is an increase in demand for Bitcoin (BTC) and Ethereum (ETH). In the last 30 days, permanent holders added 70,000 Bitcoin, with a 4.4% monthly increase in demand from large investors. These large investors are injecting $1 billion daily into Bitcoin, reminiscent of the pre-rally activity seen in 2020.
Ethereum’s demand has also seen a rise, particularly after May 20th when ETH demand surged due to spot ETH ETF approvals in the USA. Permanent holders are now purchasing 40,000 ETH daily, while large investors hold 16 million ETH.
However, CryptoQuant highlights that stablecoin liquidity needs to recover to support a sustained crypto rally. The market capitalization growth of Tether’s USDT, a proxy for fresh liquidity in crypto markets, has been slowing down and is now growing at the slowest pace since February 11. Typically, price rallies are accompanied by an acceleration in stablecoin liquidity growth.
USDT is the leading stablecoin by market cap and aims to maintain a 1:1 peg to the US dollar. At the time of writing, Bitcoin is trading at $70,812, up nearly 4% in the past week, while ETH is trading at $3,809, up 1.5% in the past week.
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