After experiencing a slight recovery mid-week, Bitcoin (BTC) is currently trading above $87,000, yet it remains below the pivotal threshold that could influence its next move.

A recent analysis has highlighted that failure to exceed $88,800 could lead to increased profit-taking, especially as active investors are currently at a loss, adding pressure to the market.

Key Focus on Bitcoin and the $88.8K Line

According to Joao Wedson, CEO of Alphractal, Bitcoin’s performance below the Active Realized Price, presently situated around $88,800, is significant. The Active Realized Price reflects the average cost basis of engaged investors, disregarding any lost, inactive, or untouched coins. This level typically signifies a point where most active investors find profit, subsequently reducing selling pressure and allowing the market to stabilize.

If Bitcoin manages to stay above this mark, it often provides a reassuring environment for investors. Conversely, being below this threshold engenders unease among investors. Wedson explained that if Bitcoin struggles to reclaim this level promptly, it might lead to intensified short-term selling activity.

Furthermore, this situation isn’t intended to incite panic but underscores the necessity of close monitoring. A failure to recover the Active Realized Price soon could catalyze additional profit-taking. In contrast, a decisive rise beyond $88,800 would indicate strength, foster renewed confidence, and lure active investors back into profitable territory, aiding in alleviating market pressures.

Beyond technical indicators, a study by Santiment indicates that the number of wallets holding at least 100 BTC has surged by 91 since November 11, while smaller wallets, especially those containing 0.1 BTC or less, have diminished. Such patterns historically correlate with long-term price strength as retail investors capitulate and larger holders accumulate.

Historically Favorable Indicators

Another vital on-chain indicator is currently showing a historically important signal. The Puell Multiple has recently dropped back into the “Discount zone,” indicating that miners are currently earning less than their average and may be facing financial strain. When this metric falls below 1, it often suggests that Bitcoin is trading beneath its fair value.

Throughout past cycles, significant rebounds in the market often commenced from these discount levels. Although it doesn’t guarantee an immediate turnaround, the conditions have previously aligned with strong recovery phases. With the Puell Multiple descending to this range, the market might be on the verge of entering a lower-risk, higher-reward environment, where fresh upward trends typically begin.