Bitcoin Faces $87,000 Resistance as Investors Await Recovery

Bitcoin's price has been oscillating without significant momentum in its recovery to a six-figure valuation. After dropping to just above $81,000 on March 18, the cryptocurrency attempted to reach the $87,000 mark but faced substantial resistance. This level is crucial for the long-term health of Bitcoin's price due to the average on-chain cost basis of several investors.

Crypto analyst Maartunn highlighted the significance of the $87,000 level in a March 21 post. The analysis is based on cost-basis, which evaluates a price level's capacity to act as resistance or support based on the total amount of coins purchased in or around it. According to Maartunn, approximately 5.58 million addresses acquired 3.79 million BTC (valued at $367 billion at an average price of $97,059) in the $87,867 – $106,839 region. These investors are currently at a loss, having bought at prices well above the current market value.

This region serves as a critical resistance area because investors are likely to sell their assets if the Bitcoin price returns to their cost basis, exerting downward pressure on the cryptocurrency and hindering further upward movement. Maartunn identified these investors as short-term holders, known for their reactivity to market fluctuations. This scenario could lead to a severe capitulation event if these short-term investors are forced to realize their losses, as they have been associated with significant sell-off events in response to price changes.

As of the latest update, Bitcoin's price is around the $84,000 mark, showing no significant change in the past 24 hours. The $87,000 level remains a pivotal point for Bitcoin's future trajectory, with the potential to either bolster its recovery or trigger a sell-off, depending on investor behavior in the identified resistance region.