Ethereum (ETH) has had an impressive July, surging over 60% from around $2,400 on July 1 to a high of $3,941 by July 27. What\u2019s particularly notable about this rally is that it appears to be driven by fresh capital inflows \u2013 not a rotation out of Bitcoin (BTC), as some have suggested.<\/p>\n
According to a CryptoQuant Quicktake post by contributor Carmelo Aleman, claims that ETH\u2019s current rally is a result of capital rotation from Bitcoin to Ethereum are unfounded. Aleman references on-chain data \u2013 especially the Bitcoin Realized Cap \u2013 to explain his analysis.<\/p>\n
For the uninitiated, Bitcoin\u2019s Realized Cap measures the total value of all BTC in circulation based on the price at which each coin last moved on-chain, rather than the current market price. It provides a more accurate view of actual capital invested in Bitcoin, helping identify accumulation or distribution trends over time.<\/p>\n
Aleman shared the following chart showing that, as of July 25 at 11 AM UTC, Bitcoin reached a new all-time high (ATH) in Realized Cap at $1.018 trillion. This increase strongly suggests that capital remains flowing into Bitcoin \u2013 not out of it.<\/p>\n
In fact, Bitcoin\u2019s Realized Cap has continued to rise, albeit gradually, even as Ethereum gained bullish momentum. Aleman explains that brief pauses in BTC price action typically align with phases of capital accumulation, which have historically preceded major rallies.<\/p>\n
Further, Aleman remarked that ETH is simply benefitting from the strong growth prospects of the Ethereum ecosystem. July witnessed a significant surge in interest in the ETH ecosystem, which reflected in the steep rise in price of the digital asset.<\/p>\n
Multiple metrics reinforce the view that new capital is entering the Ethereum ecosystem. For example, data from DefiLlama shows that the Total Value Locked (TVL) in Ethereum\u2019s decentralized finance (DeFi) platforms has risen significantly \u2013 from $49 billion on April 29 to $84.6 billion by July 29.<\/p>\n
Additional on-chain metrics point to a similar trend. According<\/a> to etherscan.io, daily transactions on the Ethereum network have been climbing steadily, with nearly 1.48 million transactions recorded on July 27 alone.<\/p>\n There\u2019s also growing speculation that Ethereum\u2019s declining circulating supply is contributing to upward price pressure. Over the past month, ETH reserves on centralized exchanges have dropped<\/a> by one million coins, supporting the narrative of a developing \u201csupply crunch.\u201d<\/p>\n