Bitcoin Drops Hard: Time To Fade The Trend And Buy BTC?
06 August 2024 - 1:00PM
NEWSBTC
Bitcoin is under immense selling pressure at spot rates, crashing
below critical multi-month support at around the $53,500 to $56,000
zone. As bears take over, there are concerns that the coin could,
after all, slip even lower, plunging towards the $50,000 and even
$40,000 level in a bear trend continuation formation. Bitcoin
Sellers Testing Resolve Of Determined Active Investors Despite the
prevailing doubts, several on-chain indicators point to strength.
Notably, one analyst observed that Bitcoin prices have dipped below
the “moderate risk lower boundary of 9% from the average purchase
price of active investors” for the fifth time in eighteen months.
If history guides, prices are likely to bounce from spot rates,
peeling back sharp losses posted over the weekend and into early
Monday, August 5. Looking at price data, the average purchase price
for these active investors (or addresses that bought BTC within the
last 155 days) currently stands at $48,000. Related Reading:
Chainlink: Market Panic Shaves 23% Off LINK Price – Details Earlier
today, August 5, when prices crashed, BTC tumbled to as low as
$49,000 before bouncing higher. Therefore, even with the drop, most
active investors are not yet in full panic mode. Challenges will
emerge once the $48,000 level is breached, testing the resolve of
these investors. For now, looking at how intense the dump was and
the accompanying trading volume, it is clear that bulls are not out
of the woods yet. Should BTC fall again in the coming session,
breaching $50,000 and $48,000, weak hands might choose to exit,
fueling the sell-off. BTC In A Bearish Formation After Drop: Time
To Take A Contrarian Approach And Buy? Technically, Bitcoin is now
within a bearish breakout formation after the close below the
consolidation. With July gains sharply reversed, losses spilling
over throughout this week are highly likely. From this outlook,
Bitcoin may slip to $40,000 in a bear trend continuation formation.
Currently, from price active, one analyst also noted that the
Bitcoin market value to realized value (MVRV) ratio is at levels
last seen when FTX collapsed in November 2022. The MVRV ratio
gauges whether the coin is available for a discount or not. Related
Reading: Ethereum ETFs Struggles To Have a Positive Impact On
Price, Whilst Investors Purchase Now Crypto at $0.00107 Though the
coin briefly tanked to as low as $15,800, the recovery afterwards
anchored the bull run of 2023 through to early 2024. Accordingly,
if the August 5 events mirror the panic selling of late Q4 2022,
Bitcoin could be available for a discount. Feature image from
DALLE, chart from TradingView
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