There are early signs of “dust settling” in the crypto market now as investors believe that the worst of the Terra (LUNA) crash appears to be over. The Bitcoin chart presentation indicates that while the ramifications have been far-reaching and very devastating for the altcoin, BItcoin (BTC) has held up fairly well.
Even with the May 12 drop to $26,697, the lowest price since 2020, multiple metrics suggest that the current levels could represent a good entry for BTC.
The pullback to this level is notable in that it was a retest of Bitcoin’s 200-week exponential moving average (EMA) at $26,990. According to cryptocurrency research firm Delphi Digital, this metric has historically been a “key area of past price lows.”
And it wasn’t just Bitcoin that had a rough day on May 12th. The stablecoin market also experienced the highest volatility and deviation from the dollar peg since the beginning of the Terra saga, with Tether (USDT) seeing the largest deviation among the major stablecoin projects as shown in the chart below from blockchain data provider Glassnode.
All four stablecoins by market capitalization managed to get back to around $0.001 peg to the dollar, but the confidence of crypto holders in their ability to hold it was definitely shaken by the events of the past two weeks.
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Bitcoin Approaching Its Realized Price
As a result of the market downturn, the price of Bitcoin is now trading at its closest since 2020.
According to Glassnode, historically achieved price has provided “healthy support during bear markets and provided signals for a market bottom formation when the market price is trading below it.”
Previous bear markets have seen BTC trade below its realized price for extended periods of time, but the amount of time has actually decreased in each cycle with Bitcoin spending only seven days below its realized price during the 2019-2020 bear market.
It remains to be seen if BTC will drop below the real price if current bear market conditions persist, and if so, for how long.
data on string Offers Many cryptocurrency holders couldn’t resist the temptation to get hold of bitcoin for less than $30,000, which led to a build-up rally that starts on May 12 and runs through May 15, but some analysts are warning that this is a sign of a quick recovery from here.
If history is any indication, most #BTC Bear market bottoms are forming quickly and in a volatile manner
But the accumulation domains that form after that take time
– Rektcapital May 13, 2022
Delphi Digital echoed this sentiment, noting that “the longer the period of price growth in these regions, the more likely it is that this will continue.”
Delphi Digital said,
“If this occurs, look for the following levels: 1) Weekly Structure Support and Volume Structure at $22,000-24,000; 2) Highest retest rates of 2017 from $19,000-20,000.”
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