The Bitcoin (BTC) market has faced some resistance this week, according to a report by cryptocurrency analytics firm Glassnode. The market reverted from a weekly high of over $31,000 to a low of $27,000, signaling a potential correction in the market.

Despite this recent dip, Glassnode’s analysis shows that the opening to 2023 has been historically strong for Bitcoin, with remarkably few significant corrections. The largest correction seen so far has been -18.6%, a relatively small drawdown compared to past cycles.

According to the report by Glassnode, the aggregate market for Bitcoin has confidently transitioned out of a period of unrealized loss and into one of unrealized profit. This is evidenced by the sharp divergence between supply held in profit versus supply held at a loss.

As this shift occurs, the incentive to take profits grows, also reflected in the ratio between supply in profit and supply at a loss. Glassnode’s analysis shows that this oscillator has achieved escape velocity in 2023, confirming the transition out of a regime of loss dominance near cycle lows. This phenomenon has only been observed on 415 out of 4,638 trading days, or just 9% of the time.

This shift in the market is significant because it suggests that investors are becoming more confident in Bitcoin’s long-term prospects. As more investors move into a position of unrealized profit, they may be more likely to hold onto their investments rather than take profits and risk missing out on potential gains.

Altcoin Sherpa, a well-known cryptocurrency analyst, recently shared his thoughts on the current state of Bitcoin. He believes that if the current market area fails, the next area up is around $25k. He also noted that the .382 fib level, a technical indicator, usually gets tapped as a retest eventually. Despite this potential dip, Altcoin Sherpa maintains a bullish outlook on Bitcoin’s market structure. 

On the same note, Michael Van de Pope, a crypto analyst and trader, suggests that the market is seeking a higher low (HL) in the weekly timeframe, potentially around the $26,500-27,000 range or even as low as $25,000. This suggests that there may be some downside risk in the short term.

However, Van de Pope notes that breaking back above $27,800 could lead to a strong upwards reaction for Bitcoin, potentially continuing the uptrend toward $29,000.

At the time of writing, Bitcoin is trading at $27,300, representing a 0.8% decrease over the past 24 hours. Despite this drop, Bitcoin is holding above its last major resistance level of $27,100. However, some analysts are predicting a potential retest of the $25,000 support floor, which could lead to further downside potential for the largest cryptocurrency in the market.

Featured image from Unsplash, chart from TradingView.com

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