Bitcoin is under massive selling pressure at spot rates, falling below critical multi-month support near the $53,500-$56,000 zone. With bears taking control, fears are mounting that the coin could fall even lower, falling towards the $50,000 level and even $40,000 in a bearish continuation pattern.

Bitcoin Sellers Test Determination of Determined Active Investors

Despite the prevailing doubts, several on-chain indicators point to strength. Interestingly, one analyst noticed that bitcoin prices fell below the “moderate risk lower bound of 9% from the average purchase price of active investors” for the fifth time in eighteen months.

If history shows prices are likely to rebound from spot rates, recouping the gigantic losses incurred over the weekend and on the morning of Monday, August 5th.

Looking at the price data, the average purchase price for these vigorous investors (or addresses that have purchased BTC in the last 155 days) is currently $48,000.

Earlier today, on August 5, when prices fell, BTC fell to $49,000 before bouncing higher. Therefore, even with the drop, most vigorous investors are not in a full-blown panic mode yet. The challenges will come when the $48,000 level is breached, testing the resolve of these investors.

For now, looking at the intensity of the decline and the accompanying trading volume, it is clear that the bulls are not out of the woods yet. If BTC were to fall again in the upcoming session, above $50,000 and $48,000, tender hands could decide to exit, fueling a sell-off.

BTC in Bearish Pattern After Decline: Time to Go Contrarian and Buy?

Technically, Bitcoin is now in a bearish breakout pattern after a close below consolidation. With July’s gains sharply reversed, losses spilling over throughout the week are highly likely. From this perspective, Bitcoin could fall to $40,000 in a bearish continuation pattern.

Currently, from the vigorous price, one analyst also recorded that Bitcoin’s Market Value to Realized Value (MVRV) ratio is at levels last seen when FTX crashed in November 2022. The MVRV ratio measures whether a given coin is overvalued or not.

Although the coin briefly dipped to $15,800, the subsequent rebound anchored the 2023 rally into early 2024. As such, if the events of August 5 mirror the panic selling of overdue Q4 2022, Bitcoin could be available at a discounted price.