Bitcoin price briefly tops $40,000 and Ether climbs above $2,600 as traders gain their composure following last week’s “historic deleveraging event”.
Crypto traders were greeted by green markets on May 24 as the majority of altcoins saw their prices bounce back following last week’s downturn that was the “largest deleveraging event since the March 2020 sell-off” according to an on-chain report from Glassnode.
After suffering the biggest monthly price drop in Bitcoin (BTC) history, bulls now look to stage a comeback with a significant amount of support forming near the $37,000 level and within the last hour Bitcoin price pushed back to the $40,000 level.
The capitulation experienced last week was “one for the history books” with data from Glassnode showing that the magnitude of realized losses on-chain “eclipsed all previous capitulation events” with a new all-time high of $4.53 billion in losses recorded on May 19 and $14.2 billion recorded for the week as a whole.
The $2.56 billion in net on-chain losses seen on May 19th was 185% larger than the March 2020 COVID sell-off with data indicating that a:
“Large cross section of the market was taken by surprise by this event.”
Not all traders were caught off guard by the move however as BTC holders with coins 1 year to 3 years old managed to spend their coins earlier in the cycle, “likely rotating capital to capture the price out-performance of ETH at that time.” These entities then stopped selling during the capitulation, while newer hands were seen panic selling as they sprinted for the exits.
Overall, last week’s “historical capitulation event” resulted in roughly 9% to 9.5% of the current market cap registering as unrealized losses, which is actually quite small when compared to previous losses seen in March 2020 and Nov. 2018.
Short term holders have borne the brunt of the market turndown and “currently hold aggregate unrealized loss of -33.8% of the Market Cap on their coins”
Hard hit altcoins bounce back
Monday’s price turnaround was a welcome sight for the altcoin market which was hit especially hard during last week’s sell-off.
One of the biggest gainers on the day has been Polygon (MATIC), which continues to receive extra attention from the cryptocurrency community as it emerges as the preferred layer-two solution for the Ethereum (ETH) network.
The added focus has led to a 100% increase in the price of MATIC on May 24 from a low of $0.837 on May 23 to an intraday high at $1.67, while the Maker (MKR) token has likewise seen its token price rally more than 100% to a high of $4,174.
Today’s market turnaround also resulted in a 30% gain in the price of Ether back to the $2,500 support level while Binance Coin (BNB) managed to gain 39% and now trades near $320.
The overall cryptocurrency market cap now stands at $1.68 trillion and Bitcoin’s dominance rate is 44.2%.
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