BitcoinWorld Bitcoin Price Analysis: Why Compass Point’s Crucial $98K Warning Demands Investor Caution In a significant move for cryptocurrency investors, the U.S. investment bank Compass Point has issued a clear warning regarding Bitcoin’s recent volatility. The firm now advises extreme caution against buying the dips until the premier digital asset can decisively reclaim the $98,000 price level. This guidance, reported by Decrypt on October 26, 2025, stems from a detailed analysis of on-chain data and short-term holder behavior, marking a pivotal moment for market sentiment. Bitcoin Price Analysis: The $98,000 Psychological Threshold Compass Point’s analysis identifies the $98,000 mark not as a random number, but as the calculated average purchase price for Bitcoin’s short-term holders. These investors, typically holding assets for less than 155 days, exhibit heightened sensitivity to price movements. Consequently, their collective cost basis creates a formidable zone of resistance and psychological pressure. When the price trades below this average, short-term holders are statistically more likely to sell during downturns to avoid losses, thereby amplifying selling pressure. The bank’s research indicates that until Bitcoin sustains a break above this level, the risk of further declines remains elevated, making aggressive dip-buying a perilous strategy. This framework provides crucial context for Bitcoin’s recent price action. In late October 2025, BTC staged a rally that pushed it to approximately $97,500, tantalizingly close to the key threshold. However, the asset failed to achieve a weekly close above $98,000, triggering a rejection that sent prices tumbling below $90,000. This event perfectly illustrates the technical and behavioral significance of the level Compass Point highlighted. Market analysts often refer to such levels as “on-chain resistance,” where previous investor entry points create a supply overhang. Understanding Short-Term Holder Psychology and Market Impact The focus on short-term holder (STH) cost basis represents a sophisticated shift in market analysis. Unlike long-term “HODLers,” short-term holders are often driven by momentum and sentiment. Their aggregate cost basis acts as a collective breakeven point. When the market price dips below it, a segment of these holders may panic-sell, converting paper losses into realized losses. This activity can create cascading sell-offs, especially in a market where leveraged positions are common. Compass Point’s warning directly addresses this dynamic, suggesting that stability above $98,000 would signal that the majority of recent buyers are in profit, potentially reducing urgent selling pressure and creating a healthier foundation for an advance. Historical Precedents and Current Market Parallels This pattern is not without historical precedent. Similar analysis of holder cost basis proved insightful during previous market cycles. For instance, during the 2021 bull run, the realized price for short-term holders often acted as support during healthy corrections and as resistance during bear market rallies. The current advice mirrors risk-management strategies employed by institutional analysts in traditional finance, where understanding the average entry point of the “weak hands” is key to gauging market stamina. The integration of such on-chain metrics into mainstream investment banking commentary, as seen with Compass Point, underscores the maturation of cryptocurrency market analysis. Furthermore, the bank’s note contextualizes potential future scenarios. While a deeper correction toward the $80,000 region could present a more attractive risk-reward entry point for some investors, Compass Point simultaneously warns of persistent risks. The primary concern revolves around leveraged purchasing. A market saturated with leverage is vulnerable to violent liquidations if prices move unexpectedly, which can exacerbate volatility and turn a routine correction into a steep plunge. Therefore, the bank implies that any buying activity, even at lower prices, should be approached with disciplined risk management and an awareness of overall market leverage. The Broader 2025 Cryptocurrency Landscape and Institutional Influence The issuance of this guidance occurs within a specific 2025 financial landscape. Regulatory clarity in major economies like the U.S. and the E.U. has progressed, leading to deeper institutional participation. Firms like Compass Point now play a more influential role in shaping retail and institutional investor behavior through published research. Their analyses are closely watched for signals about how traditional finance interprets blockchain data. This particular report highlights the growing convergence between technical on-chain analysis and conventional fundamental risk assessment, setting a new standard for how investment banks evaluate digital asset opportunities. Other market factors contribute to the current environment. The integration of Bitcoin spot ETFs, the evolution of decentralized finance (DeFi) protocols, and macroeconomic conditions like interest rates all interact with price levels identified by on-chain metrics. Compass Point’s caution serves as a reminder that despite advanced financial products and adoption, core market mechanics—like investor cost basis and leverage—remain paramount. For traders, this means complementing price chart analysis with a firm understanding of blockchain-derived supply dynamics. Conclusion Compass Point’s advisory to avoid aggressive Bitcoin dip-buying below $98,000 provides a critical, data-driven framework for navigating current market uncertainty. By pinpointing the short-term holder cost basis as a key resistance level, the analysis moves beyond simple chart patterns to incorporate behavioral economics and on-chain reality. While potential buying opportunities may emerge at lower prices, the overarching message emphasizes caution, disciplined risk assessment, and respect for leverage-related dangers. This Bitcoin price analysis from a established investment bank underscores the maturation of crypto markets, where sophisticated, evidence-based reasoning is essential for informed investment decisions in 2025 and beyond. FAQs Q1: What is the $98,000 level that Compass Point is referring to? The $98,000 level represents the average purchase price, or aggregate cost basis, for Bitcoin investors classified as short-term holders (those holding for roughly less than five months). It’s a key on-chain metric that indicates a major psychological and resistance level. Q2: Why are short-term holders so important for Bitcoin’s price? Short-term holders are typically more reactive to price changes than long-term investors. When the price falls below their average cost basis, they are more likely to sell to cut losses, which can increase selling pressure and drive the price down further. Q3: Does Compass Point say not to buy Bitcoin at all? No. The advice is specifically to exercise caution with “dip-buying”—aggressively purchasing during declines—until the $98,000 level is reclaimed. The bank suggests a deeper correction to around $80,000 could be a buying opportunity, but warns of risks from high leverage in the market. Q4: What are the risks of leveraged purchasing mentioned in the analysis? Leveraged purchasing involves using borrowed funds to amplify trades. If the price moves against these highly leveraged positions, it can trigger automatic liquidations, creating a cascade of forced selling that dramatically worsens a price drop. Q5: How does this type of analysis affect the average cryptocurrency investor? It highlights the importance of looking beyond simple price charts. Understanding on-chain metrics like holder cost basis can provide deeper insight into market sentiment and potential support/resistance levels, helping investors make more informed decisions about entry points and risk management. This post Bitcoin Price Analysis: Why Compass Point’s Crucial $98K Warning Demands Investor Caution first appeared on BitcoinWorld .