Anika Begay
Bitcoin is falling. The coin previously fell to $49,000, a 30% decline from its July highs. While the coin briefly retraced, erasing some losses, the downtrend remains, at least from the candlestick formation on the daily chart. Bitcoin’s sharp sell-off is weighing on altcoin and cryptocurrency markets. At press time, the total cryptocurrency market capitalization, according to CoinMarketCapfell 15.46% to around $1.82 trillion.
Bitcoin at a Precarious Level: Bears Could Push Prices to $40,000
While a top-down preview suggests the uptrend is still in place, one analyst believes there will be further clashes in the coming days if sellers continue to push.
Looking at X and citing on-chain developments, the analyst noticed that since the coin has recently dropped 12% from the price realized by the on-chain trader, Bitcoin is at a crucial level. In the past, prices have bounced back to the primary uptrend when BTC prices retested this line.
The on-chain trader realized price is a metric used to indicate the average price at which the current cohort of BTC holders purchased their coins. Currently, BTC is much lower than the realized price, which means that holders are in the red and may be contemplating selling to manage risk.
If BTC extends today’s losses, the likelihood of holders abandoning the cryptocurrency in favor of stablecoins or fiat currencies would be greater, accelerating the sell-off. According to the on-chain analyst, Bitcoin could plunge towards the $40,000 level if sellers press aggressively.
Is it time for institutions to buy at a discount?
From the daily chart, the bears reversed all the gains made from July 8 to July 21, pushing prices below the July 2024 lows. By pasting a Fibonacci retracement tool on the swing highs and lows from October 2023 to March 2024, it is clear that BTC has retested the 50% Fibonacci level.
Meanwhile, the August 5 bar is wide and marked by high trading volume, which means the sell-off is supported. As the coin is in a bearish breakout formation, the chances of BTC sliding towards the 78.6% Fibonacci level or up to $35,000 remain highly likely.
However, if BTC finds support this week, the bulls could be encouraged, helping the recovery. This would be a welcome development now that when prices fell today, BTC fell below average cost basis BlackRock’s spot Bitcoin ETF, which is trading around $58,700.
As long as prices remain in this zone or below, institutional investors could double down on their investments, buying more at a lower price through BlackRock.
Feature image from Canva, chart from TradingView
