Bitcoin Breaks Above $40K Again, But When Will Consolidation End?
Bitcoin is still struggling to break out of the cage that is the $40K-$44K price range. Reaching this level has not been the problem for the digital asset, but successfully breaking above it and maintaining consistent momentum above the $45,000 price point has been the biggest hurdle. Consolidation continues to be the name of the game. But how soon will this come to an end?
Bitcoin Is Still Consolidating
Bitcoin has continued to consolidate in recent times. It had broken through $40,000 three times already in the first two months of 2022 and the recent break above this point marks the fourth time. However, the previous three times have all had the same, it seems inevitable, outcome. The digital asset has not been able to maintain its position above $40K, eventually sliding back down to $38,000.
Related Reading | Crypto Market Crumbles To Extreme Fear, Is It Time To Buy?
At all times, bitcoin has presented strong support at the $36,000-$38,000 level, making it the point to beat for bears and the place to hold for bulls. So far, the bulls have proven to have the upper hand at the level. But for bitcoin, the consolidation has continued on.
BTC trading above $41,000 | Source: BTCUSD on TradingView.com
With so much time passed with current consolidation, the market has been expected to break out of it and head towards $45,000 eventually but this would prove to not be the case. Rather, the tug-of-war between bears and bulls has seen the digital asset continue in this consolidation range.
How Can BTC Break Out?
As with any consolidation range, bitcoin can break out in any direction depending on the momentum. Currently, bitcoin is trading above $42,000 but this is still weak ground, meaning that bears can drag it down with them at any time. For the digital asset to establish any meaningful recovery trend, it would have to definitively leave the $44,000 and head higher.
Related Reading | Yellen’s Positive Remarks About Biden’s Crypto EO Push Bitcoin Past $41,000
It needs to break out of the upside of the $45,000 resistance point to confirm an end to the current consolidation range. A break above this price point would be a strong signal to the market that the bulls have once again taken hold of the market. However, like always, there is no surety that a break out of the current consolidation range has to be upwards.
BTC in consolidation range | Source: Arcane Research
BTC still maintains strong support around the $36,000 to $38,000 range as mention above but a break below the lower end of this range would mean some negative implications for the cryptocurrency. Down below $36K is the next support point at $34K. But if bitcoin were to go past this point, then it would effectively end the current consolidation. This would put the next critical support level at $28,000, a range that would signal dire straits for the digital asset.
Featured image from MARCA, chart from TradingView.com