Bitcoin’s Upcycle Shows Small Drawbacks, Report
The Bitcoin (BTC) market has faced some resistance this week, according to a report by cryptocurrency analysis firm Glassnode. The market retreated from a weekly high of over $31,000 to a low of $27,000, signaling a potential correction in the market.
Despite this latest decline, Glassnode’s analysis shows that the opening to 2023 has been historically strong for Bitcoin, with remarkably few significant corrections. The largest correction so far has been -18.6%, a relatively small decrease compared to previous cycles.
Bitcoin market sees transition from loss to profit
According to the report from Glassnode, the overall market for Bitcoin has safely moved out of a period of unrealized loss and into a period of unrealized profit. This is proven by the sharp difference between offers held at a profit and offers held at a loss.
As this shift occurs, the incentive to take profit grows, also reflected in the ratio between offers at a profit and offers at a loss. Glassnode’s analysis shows that this oscillator has reached 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 only 9% of the time.
This shift in the market is significant because it suggests that investors are becoming more confident about Bitcoin’s long-term prospects. As more investors move into a position with unrealized profits, they may be more likely to hold onto their investments rather than take profits and risk missing out on potential gains.
Will BTC retest the $25,000 support?
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 is up around $25k. He also noted that the .382 fib level, a technical indicator, is usually tapped as a retest in the end. Despite this potential decline, Altcoin Sherpa maintains a positive view of Bitcoin’s market structure.
Similarly, Michael Van de Pope, a cryptoanalyst and trader, suggests that the market is seeking a higher low (HL) in the weekly time frame, potentially around $26,500-27,000 or even as low as $25,000. This suggests that there may be some downside risk in the near term.
However, Van de Pope notes that breaking back above $27,800 could lead to a strong upside reaction for Bitcoin, potentially continuing the uptrend towards $29,000.
At the time of writing, Bitcoin is trading at $27,300, representing a decrease of 0.8% in the last 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
