When those that gave up are done selling then the buying will move the PPS and others will jump in. Your post is probably at least partially correct as to where the selling is coming from.
No issue with your points however I am a speculator and I didn't say hold for long term. However, I am a patient investor. Nothing wrong with taking a 1-3 month trade.
We need the weak hands to sell us the "cheap" paper", then watch them scream at the screen when the shares go up 25% or more in a week..
Remember, not just in microcap land but in listed shares, most of the gains occur in a relatively short burst. Happens over and over.