Bitcoin consolidation phases often feel uncomfortable for traders. They test patience and conviction. However, these periods can also create opportunities for investors who follow disciplined capital management plans.
Several signals indicate that January may be the month when Bitcoin enters a critical consolidation phase before recovery.
3 signals suggest that January may be the time when Bitcoin forms a local bottom
Based on technical data and on-chain and exchange data, analysts believe that positive signals for long-term recovery have emerged.
First, technical data shows that Bitcoin is approaching an ideal DCA zone based on moving averages (MA).
According to the on-chain analytics platform Alfractals, ideal long-term accumulation zones often form when the Bitcoin price falls below all daily moving averages, from the 7-day cycle to the 720-day cycle. This condition creates a "safe zone" where the price is considered undervalued compared to the long-term trend.
Currently, Bitcoin has broken below most of these moving averages since last November. Only MA720 remains intact. This level is approaching $86,000.
"Bitcoin is very close to one of the best areas to apply a DCA strategy. Historically, these areas have been excellent for long-term accumulation. For this to happen, Bitcoin's value must drop below $86,000," said Alfractals.
A decline in Bitcoin to below $86,000 does not necessarily mean it will reach the bottom immediately, but historical data suggests that Bitcoin's period of breaking the barrier between MA7 and MA720 is likely to last several months.
Secondly, on-chain data shows Bitcoin network growth at its lowest level in years. While this seems negative, historical patterns suggest it may precede a recovery phase.
According to Swissblock, an investment fund and market information provider, weak network activity coupled with declining liquidity indicates that Bitcoin is in an accumulation or consolidation phase before its next major move.
"Network growth has reached its lowest levels not seen since 2022, while liquidity continues to bleed. In 2022, similar network levels led to a Bitcoin consolidation phase with the onset of network growth recovery, even as liquidity remained weak and reached the bottom," reported Swissblock.
Swissblock also noted that signs of renewed adoption are still essential. If this perception materializes, a rise similar to 2022 could push Bitcoin to its all-time high this year.
Thirdly, exchange data shows that selling pressure from whales has significantly decreased over the past month. This shift creates a more supportive environment for price consolidation and recovery.
According to CryptoQuant data, Bitcoin flows from whales to exchanges have sharply decreased, especially on Binance.
Specifically, Bitcoin flows from large transactions ranging from 100 to over 10,000 Bitcoin have decreased from about $8 billion a month in late November 2025 to around $2.74 billion currently. This behavioral change significantly reduces the supply from the selling side. It supports price stability and enhances recovery potential.
A combination of technical signals (price trading below major moving averages), on-chain data (declining network growth), and exchange metrics (decreasing whale sales) indicates that Bitcoin is entering an ideal consolidation phase to form a local bottom.
However, the above data is insufficient to determine an accurate price bottom. Furthermore, several external uncertainties remain unaccounted for. These probabilities include the return of tariff pressures amidst geopolitical tensions and the market impact of an upcoming change in Federal Reserve leadership.
