Bitcoin is discounted near its “realized” price, but analysts say there is room for deep downside

There are early signs that the crypto market is “dusting off” now that investors believe the worst of Terra (LUNA)’s collapse appears to be over. Looking at Bitcoin’s chart shows that although the fallout has been widespread and quite devastating for altcoins, Bitcoin (BTC) has actually held up pretty well.

Even with the May 12 drop to $26,697, marking the lowest price level since 2020, multiple metrics suggest current levels could represent a good entry into BTC.

BTC/USDT 1-day chart. Source: TradingView

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 “served as a key area for previous price bottoms.”

BTC/USD vs 200-week EMA vs 14-week RSI. Source: Delphi Digital

And it wasn’t just Bitcoin that had a rough day on May 12th. The stablecoin market also saw the highest volatility and deviation from the dollar peg since the beginning of the Terra saga, with Tether (USDT) registering the largest deviation among the top stablecoin projects, as illustrated in the chart below by blockchain data provider Glassnode.

Stablecoin prices during Terra’s meltdown. Source: Glassnode

All four of the top stablecoins by market cap have managed to get back to their dollar pegs as low as $0.001, but crypto holders’ confidence in their ability to hold up has definitely been shaken by the events of the past two weeks.

Related: Do Kwon summoned to a parliamentary hearing after the UST and LUNA crash

Bitcoin is approaching its realized price

As a result of the market decline, Bitcoin’s price is now trading as close as possible to its realized price since 2020.

Realized Price of Bitcoin. Source: Glassnode

According to Glassnode, realized price has historically “provided solid support in bear markets and provided signals of a market bottom forming when the market price is trading below it.”

Previous bear markets have seen the price of BTC trading below its realized price for extended periods, but the amount of time has actually decreased with each cycle as Bitcoin spent just seven days below its realized price during the 2019-2020 bear market.

Days Bitcoin has spent below its realized price during previous bear markets. Source: Glassnode

It remains to be seen whether BTC will fall below the realized price if current bear market conditions continue, and if so, how long this will last.

on-chain data shows that many crypto holders could not resist the temptation to acquire Bitcoin below $30,000, leading to a spike in accumulation from 12.

This sentiment was echoed by Delphi Digital, who noted that “the longer we see price increases in these areas, the more likely it is to continue further.”

DelphiDigital said,

“In the event that happens, look for the following levels: 1) weekly structure and volume structure support at $22,000-$24,000; 2) 2017 all-time high on retest of $19,000-$20,000.”

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Every investment and trading move involves risk, you should do your own research when making a decision.