Bitcoin Faces Prolonged Consolidation as Buy-the-Dip Momentum Fades

Bitcoin, the world's largest cryptocurrency by market capitalization, may be on the cusp of another period of prolonged consolidation, according to a recent analysis by 10x Research. The report suggests that the market currently lacks the momentum typically associated with buy-the-dip opportunities, which could indicate a shift in investor sentiment.

The analysis highlights that the recent price movements of Bitcoin have been characterized by a lack of significant buying pressure during dips. This absence of buy-the-dip momentum is a departure from previous market cycles, where investors would seize opportunities to purchase Bitcoin at lower prices, anticipating a subsequent price rebound. The current environment suggests a more cautious approach from investors, who may be waiting for clearer signals before making substantial investments.

The prolonged consolidation phase could be attributed to several factors, including regulatory uncertainties, macroeconomic conditions, and the overall sentiment in the cryptocurrency market. Investors are likely assessing these variables before committing to large-scale purchases, leading to a more stable but less dynamic price action.

The report also notes that the lack of buy-the-dip momentum does not necessarily imply a bearish outlook for Bitcoin. Instead, it indicates a period of consolidation where the price may fluctuate within a narrower range. This phase could provide an opportunity for investors to accumulate positions at more favorable prices, although the timing and duration of such a consolidation remain uncertain.

10x Research Director Markus Thielen stated that Bitcoin may replay the 2024 trajectory, entering a long period of consolidation after reaching a new all-time high. He pointed out that the current technical chart of Bitcoin presents a "rising wedge" pattern, usually considered a bullish continuation pattern. However, the current structure shows some signs of weakness, indicating that the market is in an uncertain state rather than a simple bullish consolidation.

Furthermore, Thielen observed that the U.S. spot Bitcoin ETF market has not shown obvious "buy-the-dip" sentiment, lacking new inflow momentum. He believes that most ETF funds mainly come from arbitrage-driven hedge funds, and the consistently low funding rate has reduced investors' willingness to add funds during recent pullbacks.

Thielen believes that the short-term outlook for Bitcoin's resumption of the uptrend is still unclear. He advises investors to temporarily close out short positions at the current stage but still lacks a clear signal to support a strong rebound.