Compass Point Marks Critical Point: Bitcoin Must Surpass $98 K to Avoid Prolonged Decline

The financial institution Compass Point has issued an important alert to investors: exercise caution when buying Bitcoin during price corrections until the digital currency surpasses the $98,000 mark. This level represents a crucial technical point – the average acquisition cost for short-term holders, according to data compiled by NS3.AI. The current scenario presents clear challenges in the cryptocurrency market.

The $98,000 Resistance Level: Technical Significance and Implications

Bitcoin managed to reach $97,500 in the recent rally but failed to break through this psychological threshold. This failure to surpass the resistance level has heightened concerns among analysts about the possibility of a prolonged downtrend taking hold. The $98,000 point is not merely an arbitrary number – it represents where many small investors entered the market, becoming an area of significant selling pressure. Currently, Bitcoin is trading at $83,780, showing a considerable distance from this critical resistance level.

Leveraged Purchases Amplify the Risk of Cascading Liquidations

An aggravating factor identified by analysts is the increasing number of leveraged trades in the market. When investors use loans to amplify their positions, systemic risk rises significantly. Compass Point’s analysis highlights that if Bitcoin approaches $80,000, we could see a wave of forced liquidations. These cascading liquidation events can intensify selling pressure and create a negative feedback loop, potentially leading to even sharper declines.

What This Recommendation Means for Investors

The Compass Point alert is not pessimistic but prudent. The institution suggests that investors wait for clearer signs of strength before increasing their exposures. Until Bitcoin demonstrates the ability to sustain prices above $98,000, the risk profile remains high, especially for those operating with leverage. The recommendation is clear: caution, proper risk management, and avoiding impulsive decisions during periods of extreme volatility.