Bitcoin Drops Hard: Time To Fade The Trend And Buy BTC?

Dalmas Ngetich

1 year ago

2 mins read

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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.

Active BTC investors have support at $48,000 | Source: @AxelAdlerJr via X

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.

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.

Bitcoin price trending downward on the daily chart | Source: BTCUSDT on Binance, TradingView

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.

Bitcoin MVRV ratio at November 2022 level | Source: @ali_charts via X

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.

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

Dalmas Ngetich

Dalmas, a seasoned crypto reporter, brings a unique perspective to the industry. His specialization in NFTs, blockchain, DeFi, and blockchain news for NewsBTC, combined with a background in mechanical engineering and over a decade of experience in journalism, has allowed him to craft over 10,000 news and feature articles over the past eight years. His diverse range of topics, including technology, Forex, and finance, reflects his comprehensive understanding of the crypto landscape.

His technical expertise and analytical skills have been recognized and featured by leading news outlets such as Investing.com, CoinTelegraph, Entrepreneur, Forbes, and other authority sites. Notably, he broke key news, including the Ripple and MoneyGram partnership, cementing his position as a thought leader in crypto.
The news exploded. Over 100,000 people devoured this meticulously crafted report, from seasoned investors to curious newcomers. His analysis wasn't just dry facts and figures; it crackled with insight, dissecting the implications of the partnership and its potential impact on the future of finance.

His deep understanding of the financial markets, technological advancements, and blockchain developments has made him a respected voice in the industry.

Dalmas is also the founder of BTC-Pulse, a crypto news site, further demonstrating his commitment to the field. He firmly believes that DeFi and NFTs are here to stay and will continue to drive financial inclusion.

Coming from Nairobi, Kenya, it is easy to see the source of his inspiration: Across Africa, millions lack access to traditional banks. Remote villages, limited documentation, and high minimum balances create insurmountable barriers.

DeFi, not just Maker or Aave, for example, but think of Bitcoin and USDT, cuts out the middleman. Forget banks with their limitations.
Even so, DeFi isn't a magic solution. The continent still struggles with reliable internet access, and educational campaigns highlighting the benefits of this wonderful solution are insufficient. Moreover, even for those interested, understanding DeFi can look like learning a new language.

Dalmas is here to help make the tech easy to understand and digestible, even for beginners.
The story of DeFi in Africa is still being written. Challenges abound, but the promise of a more inclusive financial future is a powerful motivator. With innovation and collaboration, Dalmas firmly believes that DeFi could become the key to unlocking Africa's full economic potential.
This possibility and its immense value motivate Dalmas to continue breaking key DeFi innovations and more across the globe. His engineering background further enhances his ability to deliver well-thought-out pieces that blend technical insight with clear, impactful reporting.

Beyond his professional achievements, Dalmas is deeply passionate about technology and politics. Policies drive adoption, and being at the forefront and keeping up with how they evolve is crucial for the sphere to mature.

When Dalmas is not closely monitoring the latest crypto events, he can be found in nature, exploring the picturesque countryside, and traveling with his family and friends. His love for adventure and discovery perfectly complements his investigative and reporting skills.
You can connect with Dalmas on X: @Dalmas_Ngetich, or contact him on Telegram @Dalmas_Ngetich.

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