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’s price pushed up back to the $40,000 level.
Bitcoin price pullback. Source: Glassnode
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.
Bitcoin realized loss. Source: Glassnode
The $2.56 billion in net on-chain losses seen on May 19 was 185% larger than the March 2020 COVID-19 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 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 capitalization registering as unrealized losses, which is actually quite small when compared with previous losses seen in March 2020 and November 2018.
Relative unrealized loss for Bitcoin. Source: Glassnode
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
May 24’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’s MATIC, which continues to receive extra attention from the cryptocurrency community as it emerges as the preferred layer-two solution for the Ethereum network.
The added focus 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’s MKR token likewise saw its price rally more than 100% to a high of $4,174.
Daily cryptocurrency market performance. Source: Coin360
May 24’s market turnaround also resulted in a 30% gain in the price of Ether (ETH) 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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