Bitcoin (BTC) Price Crashes Below Critical Support, Targeting $50,000 And Even $40,000

Bitcoin is under immense selling pressure at spot rates, crashing below critical multi-month support at around the $53,500 to $56,000 zone.

Bitcoin price crashed sharply on August 5, slipping below a critical multi-month support zone. As bears took over, there were concerns that the coin could slip even lower, plunging towards the $50,000 and even $40,000 level in a bear trend continuation formation.

However, several on-chain indicators pointed to strength. Notably, one analyst observed that BTC prices 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.

Average Purchase Price For Active Investors Currently At $48,000

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.

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 Close Below Consolidation: Time To Buy?

Technically, BTC 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, BTC may slip to $40,000 in a bear trend continuation formation.

Meanwhile, another 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.

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