In the first paragraph of the novel, Ponyboy mentions that his hair is longer than most boys he knows, and it is obvious to the reader that he admires its length. In the novel The Outsiders, Greasers are identified and defined by their hair. It is a status symbol that reflects their rebellious attitude. While the Socs wear madras and cut their hair short, the Greasers intentionally grow their hair long. Initially, Ponyboy is proud of his hair and rough persona. His hair is as much a part of him as his blue jeans and leather jacket. Unlike the Socs who are affluent and have enough money to enjoy material possessions, all Ponyboy has to define him is his hair. When Johnny tells Ponyboy that they'll have to cut their hair off, Ponyboy protests and mentions that his hair is his "trademark." Ponyboy's hair is part of his identity and is what defines him as a Greaser.
Ponyboy's hair is so important to him because his hair is his identity. To cut his hair would imply that he no longer belongs in his Greaser group. His hair is, essentially, the perfect "Greaser" hair. It is long and fine and it styles well. The Greasers all have long hair, combed up and back, but Pony's hair stays in place the best. He has been growing his hair out for some time. Since Pony's parents died when he was young, his family has been his older brother Darry and the rest of the Greasers. The way he wears his hair sets him apart from the rest of the town, especially the Socs, and affiliates him with his gang, the Greasers.
Ever since the beginning of the book, we have seen that Pony's hair is very important to him. It seems that it is one of the main things that he values.
The reason that Pony values his hair so much is that it is a symbol of who he is. It is his way of showing what kind of person he is. As you know, Pony is one of the greasers. The biggest thing that sets them apart from other people is the way they wear their hair. It is like their symbol of who they are.
So, to Pony, cutting off his hair is like denying who he is and forgetting where he came from.