Bitcoin Sideways Consolidation, Preparing for a Breakout or Heading for a Downtrend?

[TL;DR]

Technical indicators and on-chain data suggest that Bitcoin‘s recent consolidation phase may be nearing its end.
Institutional investors’ involvement and renewed market interest could be key drivers for Bitcoin‘s next price surge.
Analysts predict that if Bitcoin remains above $90,000 in the near term, the consolidation phase may conclude by the end of February, with a potential target price of $120,000.

Introduction

Since Bitcoin first surpassed $90,000 in November last year, its price has been fluctuating between $91,500 and $106,500. However, based on various technical analyses and on-chain data, Bitcoin‘s consolidation phase may be approaching its conclusion. Everyone is asking the same question: when will Bitcoin break out of this sideways trading range?

Bitcoin Price Movements: Is the Consolidation Phase Coming to an End?

Currently, Bitcoin continues to trade within its established range. Some cryptocurrency analysts have pointed out concerns over trade wars and market liquidations, triggered by former U.S. President Donald Trump’s tariff policies could lead Bitcoin to remain in this range for a while longer.

In a February 5 analysis, cryptocurrency market analyst Rekt Capital noted that while Bitcoin briefly tested the $101,000 level on February 3, it failed to convert this level into stable support. He remarked, “Bitcoin may continue to consolidate between $98,300 and $101,000 for the time being.”

Meanwhile, independent analyst Arjantit believes Bitcoin’s consolidation phase could persist until the end of February. He stated, “After a 15-week rally (with a 105% increase), Bitcoin is currently in a healthy consolidation phase. As long as BTC/USD stays above $90,000, its daily structure remains intact. However, if it falls below $90,000, this could present a ‘buying opportunity.’ The consolidation phase is expected to end by late February, at which point Bitcoin could rebound to $120,000.”

Standard Chartered Bank, in its latest report, predicts that Bitcoin (BTC) prices could reach $500,000 by 2028. This forecast is based on two key factors: the adoption of spot Bitcoin ETFs and reduced price volatility.

Geoffrey Kendrick, Global Head of Digital Asset Research at Standard Chartered, highlighted that as the U.S. spot Bitcoin ETF market matures, Bitcoin’s volatility will gradually decrease. He added that under the Trump administration’s supportive policies, access to Bitcoin is improving, and institutional capital inflows into spot Bitcoin ETFs are expected to continue growing.

Bitcoin Demand Has Yet to Peak

Although Bitcoin has breached the $100,000 psychological barrier, market data indicates that current demand levels remain below the peaks of previous bull market cycles.

On-chain analytics platform Glassnode mentioned in its latest report that the current market behavior differs from traditional cycle patterns. The report stated, “At the peak of the 2017 bull market, new demand accounted for 26% of Bitcoin activity; during the 2021 bull market peak, this figure rose to 32%. However, at the current all-time high of $109,000, new demand accounts for only 23%.”

Glassnode further noted that current demand is primarily driven by large institutional investors rather than retail participants. This suggests that increased participation from smaller investors may be the key to ending Bitcoin’s current consolidation phase.

Additionally, Google Trends data shows that social interest in Bitcoin remains lower compared to previous bull market cycles. Bitcoin’s search interest has yet to reach the levels seen during the 2021 bull market. Only when investor interest picks up again will Bitcoin likely break out of its current trading range.

Meanwhile, CryptoGoos reported that BlackRock has been steadily accumulating BTC and ETH during recent market pullbacks. This trend aligns with the ongoing decline in exchange supply, indicating a gradual increase in demand for these assets.

Notably, Bitcoin-focused financial firm Strategy (formerly MicroStrategy) has also raised its Bitcoin earnings forecast, announcing a 2025 “BTC Revenue” target of $10 billion and revising its 2025 BTC annual return target to at least 15%. This has further fueled bullish sentiment for Bitcoin.

According to Coinglass data, the current long-to-short ratio stands at 0.9849, reflecting a slight improvement in market sentiment. However, open interest (OI) has decreased by 2.30%, dropping to $58.84 billion. Key support levels are currently at $95,000 and $92,000, while resistance levels are at $100,000 and $105,000.

Technical Indicators Suggest an Imminent Breakout

From a technical perspective, Bitcoin’s volatility indicators suggest that the current consolidation phase may be a precursor to a significant breakout.

According to daily timeframe charts shared by technical analyst Trivedi, Bitcoin recently bounced off the $92,000 range low and retested the 50% Fibonacci resistance level. However, the price failed to break above the 20-day EMA resistance and continues to trade below it, indicating insufficient buying momentum in the market.

While BTC has repeatedly dipped below the $100,000 mark, the overall uptrend remains intact. As long as the price stays above $90,000, bulls are likely to remain in control, potentially reigniting an upward trend.

Additionally, the tightening of Bollinger Bands often signals an impending price surge. Currently, Bitcoin’s daily Bollinger Band width has contracted significantly, touching oversold levels. Similar patterns have preceded major price rallies in the past. For example:

• In November 2024, Bitcoin’s price surged 46%, from $67,300 to $99,317, following a contraction in Bollinger Band width.
• In June 2024 and January 2024, similar contractions led to price increases of 31% and 19%, respectively.

Market analyst best_analysts also noted in a recent post on the X platform that if historical price patterns repeat, Bitcoin may be on the verge of a larger breakout. Based on long-term trend analysis, BTC could climb to around $170,000 in the coming months, with the exact magnitude of the rally depending on its ability to sustain the current trend.

Conclusion

In summary, Bitcoin’s current consolidation phase may be nearing its end. From technical indicators to on-chain data and shifting market demand, all signs point to a potential breakout in the near future. Once investor interest reignites, Bitcoin could experience another strong upward rally.