Demand Growth Has Increased for Bitcoin: What Does This Mean?

Analysts at market intelligence platform CryptoQuant have identified an increase in demand for bitcoin (BTC) from large investors and regular investors. While this could mean many things for the crypto industry, it is considered a positive sign based on the laws of supply and demand.

In the latest CryptoQuant weekly report, market experts said that accelerating BTC demand growth is essential for a sustained price rally. Therefore, BTC may witness a significant price increase soon.

Bitcoin demand growth accelerates.

The pressure to sell cryptocurrencies from BTC traders has eased as they end up taking profits. Currently, unrealized profit margins are hovering around 3%, compared to 69% at the beginning of March, and analysts currently expect very low sales pressure from traders.

While sales pressure is low, demand is increasing. Accelerating demand for BTC is evident in the recovery of flows into the United States Bitcoin Exchange-Traded Fund (ETF) market.

These investment vehicles have been in for 19 days since mid-May and have recently generated hundreds of millions of dollars in revenue. CryptoQuant said it rose to 859,000 from 819,000 on May 1.

Bitcoin whales are not immune to the wave of demand as they have added over a billion dollars to the network. This set of investors is seeing a 4.4% monthly increase in demand, the fastest since mid-April.

Bitcoin Wells current movement is similar to their chain movement in 2020 before BTC rises from $10,000 to $70,000. At the time, BTC hovered around $10,000 for six months in a massive off-chain move, which was later identified as an out-of-order deal.

No rally yet.

In addition, permanent BTC holders have accumulated more than 70,000 in the past 30 days, a significant increase since the end of April. An increase in the demand of these market participants is often associated with higher prices.

Interestingly, Ether (ETH) demand is experiencing similar growth rates to BTC, especially since the US Securities and Exchange Commission has approved the launch of spot Ethereum ETFs. The daily purchase of permanent holders and the growth of total holdings of ETH investors increased significantly.

However, CryptoQuant analysts are unable to consolidate the price rally for BTC or ETH as the stable coin has yet to recover its growth trajectory. Increases in Statcoin's liquidity often accompany market rallies.