Bitcoin consolidation phases often test trader patience but can create opportunities for disciplined investors. Several signals indicate January could be a critical period for Bitcoin ahead of a potential recovery.
Analysts point to technical, on-chain, and exchange data suggesting positive signals for a long-term recovery have emerged.
Technical data shows Bitcoin approaching an optimal dollar-cost averaging zone based on moving averages. According to on-chain analytics platform Alphractal, ideal long-term accumulation zones often form when BTC price falls below all daily moving averages from 7-day to 720-day cycles. This creates a "safe zone" where price is considered undervalued relative to long-term trends.
Currently, Bitcoin has broken below most of these moving averages since last November, with only the MA720 remaining intact near $86,000.
"Bitcoin is getting very close to one of the best zones for applying a DCA strategy. Historically, these zones have been excellent regions for long-term accumulation. For that to happen, BTC would need to drop below $86,000," Alphractal commented.
Bitcoin falling below $86,000 doesn't guarantee immediate bottoming, but historical data suggests periods of BTC breaking through MA7 to MA720 typically last several months.
On-chain data reveals Bitcoin network growth at its lowest level in years. While this appears negative, historical patterns suggest it can precede recovery phases.
According to Swissblock, an investment fund and market intelligence provider, weakening network activity combined with low liquidity indicates Bitcoin is in an accumulation or consolidation phase before its next major move.
"Network growth has hit lows not seen since 2022, while liquidity continues to drain. Back in 2022, similar network levels triggered a BTC consolidation phase as network growth began to recover, even while liquidity remained weak and bottoming out," Swissblock reported.
Swissblock noted that signs of renewed adoption are still needed. If this thesis plays out, a rally similar to 2022 could push Bitcoin to a new all-time high this year.
Exchange data shows selling pressure from whales has declined significantly over the past month. According to CryptoQuant data, BTC flows from whales to exchanges have dropped sharply, especially on Binance.
Specifically, BTC inflows from large transactions ranging from 100 to over 10,000 BTC fell from nearly $8 billion per month in late November 2025 to around $2.74 billion currently. This behavioral change significantly reduces sell-side supply, supporting price stability and strengthening recovery potential.
The combination of technical signals, on-chain data showing low network growth, and exchange metrics indicating reduced whale selling suggests Bitcoin is entering an ideal consolidation phase for forming a local bottom.
However, this data is insufficient to determine an accurate bottom price. Several external uncertainties remain unaccounted for, including possible tariff pressures amid geopolitical tensions and market impact from an upcoming change in Federal Reserve leadership.