Bitcoin (BTC) has been consolidating since its recent best high at $42,000 and has risen dorsum to a higher place $34,000 at the time of writing. The current correction is currently at 30% already, as Bitcoin'due south price has bounced from the $xxx,000 region several times.

However, it remains to be seen whether Bitcoin'due south price volition kickoff accelerating once more or whether BTC price needs more than consolidation to build upwards strength.

Several periods of accumulation were seen in 2020, where Bitcoin's cost ranged for a catamenia of a few months. Such a period is, in fact, needed to build strength for continuation. The primary question is whether such a range-bound structure volition at present yield the same results.

Clear downtrend since $42,000

BTC/USDT 3-hour chart. Source: TradingView

The three-hr chart shows a downtrend since the peak high at $42,000. This structure is formed using the lower highs and lower lows. In this example, the lower highs are marked in the grey boxes and are pregnant.

Therefore, for whatsoever bullish reversal, Bitcoin's price must interruption through the disquisitional resistance zone at $34,000 to $34,500, as that'south the previous support. If that level doesn't flip for support again, the market will allocate that every bit a back up/resistance flip, and more than downside becomes likely.

The price of Bitcoin has been testing the back up area at $thirty,000 for a significant amount of time. The more often a level gets tested, the weaker information technology becomes. In addition to this are the weaker bounces from the $30,000 region, which accept resulted in lower highs.

If, therefore, $34,000 doesn't flip into back up, a renewed test of the $thirty,000 zone should indicate further weakness, putting $24,000 to $26,000 on the tables.

The 21-Calendar week MA is currently at $20,000

BTC/USD 1-calendar week chart. Source: TradingView

The weekly nautical chart for Bitcoin shows a articulate confluence between the 21-calendar week moving boilerplate (MA) and support as the 21-week MA served as a major back up zone for the entire bull wheel in 2017.

Another vital signal in this chart is the gap between the 21-week MA and the price of Bitcoin. Once that gap increases, Bitcoin'southward price accelerates significantly and may be a sign of Bitcoin condign overvalued in the short-term perspective.

Frequently, the asset price — in this instance, Bitcoin — comes back to the mean to test the 21-week MA for back up earlier information technology continues its run. Currently, the 21-Week MA rests on the $20,000 price level. This is besides the previous all-fourth dimension loftier and the ultimate bottom for a correction as the marketplace doesn't want to encounter the toll of Bitcoin drop below the all-time high of 2017.

However, the price falling toward the all-time high of 2017 isn't guaranteed, as most of the markets are eager to purchase at that cost. A correction toward $24,000 to $26,000 is still very healthy and would be in line with whatsoever bull market correction.

Full market cap consolidating above previous ATH

Full cryptocurrency marketplace capitalization, i-week chart. Source: TradingView

The full market capitalization of cryptocurrency is consolidating higher up the previous all-time high of 2017.

The previous all-fourth dimension high of Bitcoin is unlikely to accept another exam for support, but the total market place capitalization could quickly retest this level at $750 billion.

Such a test of the support zone would be natural and could be expected as the marketplace went virtually vertical in recent months. A consolidation period is more than healthy and organic for a market to build up strength for the rally to keep.

A potential scenario for Bitcoin

BTC/USDT 4-hour chart. Source: TradingView

Given the current downtrend in the markets, more downside is likely, which may result in a further rounded bottom.

Moreover, February is often a corrective period for the cryptocurrency markets, which means that the summer could run into the resumption of the bull market.

If Bitcoin's price can intermission through the $34,000 expanse, the side by side resistance zone at $37,500 is still the previous lower loftier. One time Bitcoin'southward toll makes another lower high, the likelihood of a further drop down to the 21-week MA rises.

Such corrections could be painful for altcoins but may nevertheless provide massive opportunities for latecomers to join.

The views and opinions expressed here are solely those of the writer and practise not necessarily reflect the views of Cointelegraph. Every investment and trading motility involves risk. You should conduct your own research when making a decision.