Bitcoin is facing strong resistance near $87,700 after running into selling by some investors.

Cointelegraph reported on Tuesday that on-chain analytics firm Glassnode said investors who were in losses are selling around their cost basis, but new demand is not absorbing the supply sufficiently.

Break-even for investors holding for 6 to 12 months stands at $87,700, while the break-even level for 1 to 2-year holders is $99,500. Bitcoin has repeatedly seen rallies stall this year whenever prices approached these groups' average purchase prices.

In November last year, bitcoin fell below $94,000, the average purchase price at the time for 6 to 12-month holders. In January this year, it tried to break above the rising cost-basis trendline, which had climbed to $97,100, but hit resistance and then fell by more than a third. A cost basis that had acted as support turned into resistance as break-even selling built up.

Holders in the 1 to 2-year group showed a similar pattern. In February this year, bitcoin fell below their average purchase price at the time of $76,900, pushing the group into unrealised losses. In May, their cost basis rose to above $82,000, and bitcoin failed to rebound around that level before dropping about 25 percent. The group also increased selling during the rebound phase in early October.

From a technical perspective, resistance is also clustered in the $87,000 range. The year's opening price of $87,490 and the 20-month simple moving average of $87,165 are concentrated in that zone. Glassnode said there have been cases in which bitcoin went on to set record highs after reclaiming that moving average as support.

On the downside, around $80,000 was cited as a key support area. The average purchase price for spot bitcoin exchange-traded funds (ETFs) is $81,500, while the "true market mean", the average purchase price of bitcoin traded on the secondary market, is $77,500. The break-even level for short-term holders with holding periods of 6 months or less was tallied at $74,600.

The order book also shows buy orders forming near $80,000. Glassnode viewed $80,000 to $81,500 as a support zone where order-book buying overlaps with the average purchase price of spot bitcoin ETFs. It said that if this area breaks, the liquidation zone below $80,000 and the true market mean around $78,000 could become the next test.

Key issues going forward are whether bitcoin can break through resistance at $87,700 and whether it can hold the $80,000 to $81,500 support zone. To extend gains, it needs new demand to absorb selling built up at the break-even recovery area. In a decline, whether the ETF average purchase price and order-book buying can support the price is expected to become important.