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Enthusiasm towards spot ETF approvals (and what that means for wider adoption) has prompted a resurgence in demand for cryptocurrencies with Bitcoin and Ethereum soaring this week.

Bitcoin has erased all the losses from the Terra stablecoin crisis…

Source: Bloomberg

And Ethereum is back above $2,000, outperforming bitcoin this week…

Source: Bloomberg

…after the ETH/BTC cross found critical support…

Source: Bloomberg

Financial institutions have been relatively slow to get into digital asset markets. But, as regulatory clarity improves, that’s about to change according to many industry participants.

According to Novogratz, a Bitcoin ETF will bring a measure of institutional confidence and a significant amount of funding to the cryptocurrency space.

Interestingly, as CoinTelegraph reports, the potential influence of an Ether spot ETF was also brought up during the investor call. Galaxy Digital’s CEO said its possible approval might not be as well received as a Bitcoin ETF, given that Ethereum’s validating model is based on a staking model and staking yields.

Novogratz is already seeing confirmation of his views on adoption as institutional buying appears to have started as we highlighted Goldman Sachs Crypto team's recent comments yesterday: initial market data suggests that market activity was heavily institutional with four main indicators:

Novogratz and Goldman are not alone.

Dan Tapiero, founder and CEO of 10T Holdings, expects a "torrent" of institutional inflows in the run-up to a US ETF approval.

At the same as the demand-side of the crypto space looks to be accelerating, the supply-side is tightening.

As The Block reports, the circulating supply of bitcoin is historically tight, with coins held by long-term investors at an all-time high, according to Glassnode data.

The data found that existing bitcoin investors are becoming increasingly unwilling to part with their holdings, with analysts at Glassnode observing "impressive rates of accumulation taking place."

Additionally, Glasnode analysts highlighted the that "The illiquid supply metric, which measures the amount of supply held in wallets with minimal history of spending is also at an all-time high of 15.4 million bitcoin"…

The analysts added that the spending behavior of short-term bitcoin holders has changed following BTC's rally above the key $30,000 level.

Finally, circling back to demand, Erik Anderson, Global X’s Senior Digital Assets Research Analyst, concludes in a recent op-ed at CoinDesk: While institutional allocations to crypto have faced myriad roadblocks through the years, the foundation being laid today signals a shift in the winds. Incremental gains on the regulatory front, maturing market infrastructure, a growing number of institutionally viable investment vehicles, and a deeper understanding of the value of crypto-assets are all leading institutional investors to take a fresh look, promising a potentially transformative crypto landscape ahead.