Why the $87,000 Level Could Be Pivotal to the Long-Term Health of the Bitcoin Price

Over the past few weeks, the Bitcoin price has not been able to sustain any meaningful momentum in the journey to recover its six-figure valuation.

Over the past few weeks, the Bitcoin price has not been able to sustain any meaningful momentum in its journey to recover its six-figure valuation. After falling to just above $81,000 on Tuesday, March 18, the flagship cryptocurrency pushed for the $87,000 mark before facing a significant level.

According to a March 21 post by popular crypto analyst Maartunn, this $87,000 price point could be crucial for the long-term health of the Bitcoin market.

To understand why this specific analysis matters, it’s best to break down the average on-chain cost basis of several BTC investors. Cost-basis analysis assesses a price level’s capacity to function as either resistance or support by examining the total amount of coins purchased in or around it. The size of the dot in the chart below indicates the number of coins bought within a particular price bracket (hence the strength of the support or resistance area).

As highlighted by Maartunn, about 5.58 million addresses bought 3.79 million BTC (valued at $367 billion at an average price of $97,059) between the $87,867 – $106,839 region. These investors are “sitting on a hot potato” and are currently in the red, having purchased coins at prices higher than the current market valuation.

Typically, this $87,867 – $106,839 region acts as a crucial resistance area. If the Bitcoin price rises again and reaches this zone, these investors are likely to sell their assets should the market return to their cost basis. This selling activity would put some downward pressure on the premier cryptocurrency, hindering the further upward price movement.

Furthermore, the investors within the $87,867 – $106,839 region are identified as short-term holders, a class of investors known to be “fragile” and more responsive to slight market movements. This might not be an ideal scenario, especially if the market experiences another wave of bearish pressure.

Short-term holders have been linked to significant sell-off events in reaction to price fluctuations. Ultimately, this implies that the Bitcoin market could experience a severe capitulation event if the short-term investors in the $87,867 – $106,839 region are forced to realize their losses.

Bitcoin Price At A Glance

As of this writing, the price of BTC is trading at $84,000, reflecting no significant change in the past 24 hours.