Following a mid-week period of relief, Bitcoin (BTC) is currently trading just above $87,000. However, it remains below a critical price level that could significantly influence its trajectory.
New observations indicate that a failure to surpass $88,800 might trigger further profit-taking, especially as active investors find themselves at a loss, increasing market pressure.
Bitcoin Battles the $88.8K Line
Bitcoin's current position below its Active Realized Price, which is approximately $88,800, has emerged as a pivotal point, according to Joao Wedson, Founder and CEO of Alphractal. The Active Realized Price represents the average cost basis of active investors, excluding coins that are lost, dormant, or have not been moved. Consequently, it reflects the price that the most engaged participants actually paid for their Bitcoin.
When Bitcoin trades above this threshold, the market environment typically stabilizes. This is because the majority of active investors are in profit, which in turn reduces selling pressure, allowing the market to find a more solid footing. Conversely, with BTC still trading below this level, market sentiment tends to shift. Wedson explained that this situation can cause unease among investors, and historically, such conditions have led to an increase in short-term selling, particularly if the price struggles to reclaim this level promptly.
Wedson emphasized that this observation is not a cause for panic but highlights an important area to monitor closely. Should Bitcoin fail to recover the Active Realized Price in the upcoming days, additional profit-taking activity could materialize. On the other hand, a decisive move back above $88,800 would signal strength and renewed confidence, with active investors returning to profitability. Such an outcome generally alleviates market pressure and supports more constructive momentum.
Beyond these technical considerations, Santiment recently reported that wallets holding at least 100 BTC have increased by 91 since November 11. Concurrently, smaller wallets, particularly those with 0.1 BTC or less, have seen a decline. This pattern has historically been associated with long-term price strength, as retail investors capitulate and larger holders, often referred to as whales, accumulate assets.
Historically Favorable Zone
Another significant on-chain indicator is currently flashing a historically relevant signal. The Puell Multiple has dropped back into the "Discount zone." This indicates that miners are earning less than their typical average, potentially experiencing financial strain. When this indicator falls below 1, it often signals periods where Bitcoin is trading below its perceived fair value.
In previous market cycles, major rebounds have frequently initiated from these discount levels. While this does not guarantee an immediate market bottom, it has consistently coincided with the commencement of strong recovery phases. With the Puell Multiple returning to this range, the market may be entering an environment characterized by lower risk and higher potential rewards, where new uptrends typically begin.