The classic bottom zone reappears on the back of serious sell pressure stoked by mayhem on stablecoin markets.
Bitcoin (BTC) bounced past $28,000 during May 12 after repeating a chart structure not seen since March 2020.
BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView
BTC seller losses spiral
A strong reversal then sent the pair several thousand dollars higher in minutes, with consolidation then taking hold to see it trade at around $27,000.
The bounce zone was significant, constituting Bitcoin’s so-called realized price — the sum total of all unspent transaction outputs (UTXOs).
The last time that BTC/USD tested realized price was during the COVID-19 cross-market crash in March 2020.
“Bitcoin basically kissed the realized price ($24k). $BTC is cheap,” Checkmate, lead insights analyst at on-chain analytics firm Glassnode, noted on Twitter.
Bitcoin realized price vs. BTC/USD chart. Source: Glassnode
Checkmate added that realized losses — investors selling BTC while being underwater versus their cost price — had also spiked to its second highest daily levels ever at around $2 billion.
Bitcoin realized losses chart. Source: Checkmate/ Twitter
As Cointelegraph reported, liquidations had also mounted over the previous 24 hours, passing $1.2 billion across crypto.
Tether peg crawls back into view
The other main topic of the day, stablecoins, meanwhile began to divide opinion on the outlook for Bitcoin itself.
As largest stablecoin Tether (USDT) saw its U.S. dollar peg slip, two camps emerged, one accusing Tether of malpractice and another confident that the peg would soon be restored — unlike that of imploded U.S. dollar stablecoin, TerraUSD (UST).
“The USDT peg is restoring already, which is a good sign,” Cointelegraph contributor Michaël van de Poppe wrote in one of many tweets on the day.
“People shouldn’t compare $USDT with $UST as those are completely different, although the reaction on the markets are because of tremendous fear levels. Still looks like capitulation to me.”
Commentator WhalePanda furthered the sentiment, warning of “peak FUD” from what he and others called “Tether truthers.”
People confusing $USDT and $UST and panicking.
People don’t understand the difference between an under collaterized algorithmic stablecoin and a backed stablecoin.
Panic dumping $USDT for $USDC and plain old $USD.
Peak fud time.
Warning: this post will attract “Tether truthers”
— WhalePanda (@WhalePanda) May 12, 2022
USDT/USD traded at 2% below dollar parity at the time of writing.
USDT/USD 1-hour candle chart (Bitstamp). Source: TradingView
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