Based on on-chain data, one mysterious crypto fund could be directly behind the recent Bitcoin, Ethereum, and digital asset rally.

According to Lookonchain data streams, an unknown fund started strategizing its entry into crypto in early December 2022. Then, it was observed that they converted large chunks to USDC, a stablecoin, from its issuer, Circle. 

After that, the funds were converted to USDT, the world’s most liquid stablecoin issued by Tether Holding, in five different addresses before being moved to exchanges.

1/ A mysterious fund started pouring money into the crypto market ahead of this year's small #BullMarket.

The fund started withdrawing $USDC from #Circle on Dec 7, 2022 and has over 10B $USDC as of today.

Then exchanged for $USDT via 5 addresses, and deposited to exchanges. pic.twitter.com/n4UiVWSbHe

— Lookonchain (@lookonchain) February 9, 2023

Specifically, on-chain data shows that whenever the fund minted USDC from Circle and converted to USDT before being moved to Coinbase, Kraken, and Binance, the Ethereum (ETH) price began increasing. 

Based on this correlation, analysts are convinced that the “rise in cryptocurrency prices has something to do with this fund.”

As of February 9, the mysterious crypto fund has $1 billion USDC.

By shifting huge sums of USDT to exchanges whose order books are open to the public, the fund could have triggered a pump in Ethereum prices. From late December 2022, Ethereum and crypto prices began recovering from the lows registered in 2022. ETH prices have increased roughly 40% from December 2022 lows. 

Ethereum is trading at over $1,600. Meanwhile, the price of Bitcoin is above $22,000.

The improvement of asset valuation follows a price slump that saw BTC drop to as low as $15,300 at the height of the FTX-induced fear, uncertainty, and doubt (FUD). FTX filed for bankruptcy in November, months after 3AC, a crypto hedge fund, went under. Both events triggered a crash in the market.

Why the crypto fund prefers Ethereum is yet to be known. However, Ethereum has shifted to a proof of stake system and is thought to be more environmentally friendly than Bitcoin, which still uses a proof of work consensus algorithm system that is more energy intensive. There are arguments that by using a staking system, the smart contracting platform stands to attract more investors. 

Ethereum also dominates as the home of DeFi and NFTs. DeFiLlama shows that DeFi protocols in the network manage over $28 billion of assets. Lido Finance, a liquidity staking provider, currently dominates, managing over $8.3 billion. 

The block utilization rate in Ethereum is consistently above 95%, pointing to the high level of demand. By attracting activity, there is demand for ETH, which is used to pay for gas, leading to more coins being destroyed, making it more inflationary. Ultrasound Money on February 9 indicates that 70,547.33 ETH had been burnt in the last month.

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