Bitcoin (BTC) Consolidates Between Key EMAs, Mirroring 2021 Trends That Led to a Breakout

A Rekt Capital analysis illustrates Bitcoin's current price landscape, which resembles the case in 2020. The price is trading between the 21-week and 50-week EMAs

Bitcoin is currently consolidating between major EMAs, mirroring 2021 trends that led to a breakout, and needs to hold the 50-week EMA to continue its bullish trend. However, reduced trading volume is a warning signal as Bitcoin nears a market decision.

Bitcoin Consolidates Between Pivotal EMAs

As shared by Rekt Capital, Bitcoin is testing major support levels that will decide the next move. The coin is pivoting between the 21-week and 50-week EMAs, a similar setup before Bitcoin’s breakout in mid-2021. According to the analyst, Bitcoin’s previous movements are a sign that there may be a continuation of the uptrend.

The coin is also testing support near the 50-week EMA, an area that has been significant in past market cycles. If Bitcoin can hold this support, a bounce can trigger another bull run. However, if it loses this level, further downside may be on the cards before recovery can be achieved.

#Bitcoin is now testing the 50-week EMA once again after bouncing off of it in December 2022 to begin this current leg up

50-week EMA is an important Fib level and acts as support/resistance in various timeframes of #BTC

Will 50-week EMA hold to continue the uptrend? Or will 50-week EMA get sliced to trigger more down? pic.twitter.com/Y401x51Q1v

— Rekt Capital (@rektcapital) March 7, 2023

Rekt Capital points out that Bitcoin had been consolidating in this range prior to breaking into new all-time highs in November 2021. The analyst points out that a repeat setup will trigger another breakout, pending Bitcoin staying above key support levels.

Also, the absence of significant volume means that the traders are not yet convinced, still waiting for a strong breakout. Rekt Capital points out the importance of holding key support as previous price action has demonstrated retests like this before spectacular rises.

Critical Market Moment For Bitcoin

A recent assessment from TradingView observations further supports the consolidation pattern. The time frame shows Bitcoin trading between $33,000 and $42,000 within a descending triangle formation.

Bitcoin has persistently been testing resistance at around $42,000 and supporting at around $33,000. A breakout above the upper resistance with confirmation can signal a new bull run, and a breakdown below support can result in extended corrections.

Moreover, historical patterns show that Bitcoin went through similar consolidations before significant price increases. The present price action is indicative of a compression phase, which is a precursor to higher volatility. The next major move will hinge on whether Bitcoin holds support or sees additional selling pressure.