LUNA Aftermath: Total Crypto Market More Oversold Than Black Thursday
May 18 2022 - 9:26AM
NEWSBTC
Panic struck the crypto market last week when Bitcoin broke below
support, stablecoins unpegged from the dollar, and LUNA dropped to
zero. The bloody aftermath has left cryptocurrencies as a whole
more oversold than the Black Thursday COVID collapse. Here is a
closer look at the historically oversold conditions in crypto.
Total Crypto Market More Oversold Than Black Thursday It was a
bloodbath in Bitcoin, apocalypse in altcoins. Even stablecoins
pegged to the price of the almighty dollar were completely shaken.
A nefarious actor or group of actors strategically attacked the
dollar-peg of the UST stablecoin, causing a domino effect of
algorithmically driven liquidation of reserve assets that included
BTC. Related Reading | This Expanding Triangle Pattern Could Be The
Last Hope For Bitcoin Bulls Bitcoin plunged through support and
many altcoins reached a total drawdown of 80 to 90% or more. LUNA,
an asset tied to UST, fell all the way to zero. Billions were wiped
out from the total crypto market cap. If there was ever a time to
be doubtful about the future of crypto, it might be now. However,
market veterans recommend when things become doubtful, you zoom
out. The weekly RSI is more oversold than on Black Thursday |
Source: CRYPTOCAP-TOTAL on TradingView.com “When in doubt, zoom
out,” holds true in this case. Comparing the recent crypto selloff
with Black Thursday, the weekly RSI has reached even more extreme
oversold levels. Meanwhile, the Black Thursday candle recorded a
50% drawdown, and the latest correction by contrast barely produced
30%. By definition, a hidden bullish divergence occurs when an
asset’s price sets a higher low, yet the indicator sets a lower
low. This often indicates continuation ahead. Elliott Wave
Theory suggest the cycle isn't complete | Source:
CRYPTOCAP-TOTAL on TradingView.com Could Another 45% Collapse Still
Be Ahead? Elliott Wave Theory could provide clues as to what
continuation might look like ahead. The total crypto market cap is
also trading within a parallel channel, of which it just touched
the bottom of. The upper boundary of the channel is roughly $10
trillion USD. Related Reading | Bitcoin Bear Market Comparison Says
It Is Almost Time For Bull Season While that fact might be the hope
bulls need right now, bears still could have the last laugh. The
weekly RSI has now reached the lowest level since the bear market
bottom and the fourth lowest in its history on TradingView. Only
three other times has the total crypto market cap been more
oversold | Source: CRYPTOCAP-TOTAL on TradingView.com Of the
three previous lows set on the weekly RSI, two were bear market
bottoms. The remaining low, however, was followed by another 45%
plunge to the final bottom. Another 45% drop from here would take
the total crypto market cap back to around $600 billion, or below
the January 2018 cycle peak. Simply put, risk is still extremely
high, but as oversold conditions increase, so does the potential
for reward. Act accordingly. Follow @TonySpilotroBTC on Twitter or
join the TonyTradesBTC Telegram for exclusive daily market
insights and technical analysis education. Please note: Content
is educational and should not be considered investment
advice. Featured image from iStockPhoto, Charts from
TradingView.com
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