Bitcoin’s Double Top Suggests BTC Could Fall to $50K: Analyst

As a researcher studying Bitcoin’s price movements this month, I’ve witnessed its volatile trajectory firsthand. Reaching an almost euphoric height of close to $70,000, just shy of the March all-time high, Bitcoin has since experienced a significant pullback, now hovering around $63,000. This decoupling from Nasdaq’s upward trend can be attributed primarily to increased miner selling and investor profit-taking near lifetime highs. Additionally, there have been notable outflows from U.S.-listed spot exchange-traded funds.

In simpler terms, the graph of the asset’s price has created a double top formation. This is a bearish chart pattern where there are two successive peak prices with a trough in between. Following a strong upward trend, this pattern indicates that the uptrend might be losing momentum. The downward breakthrough of the price between these two peaks confirms a shift towards a downtrend.

According to Markus Thielen, the founder of 10x Research, Bitcoin’s price chart seems to exhibit a double top pattern currently. The support level is being put to the test in this setup. This double top formation serves as our primary analysis, unless it gets disproved. A potential price drop to $50,000, or even $45,000, could be anticipated based on this chart configuration.

As an analyst, I believe the upcoming U.S. election and Consumer Price Index (CPI) report could bring positive developments for the market later in the year. However, it’s important to note that there might be room for a more pronounced correction beforehand.

The core PCE price index for inflation, as preferred by the Federal Reserve and relating to May, is predicted to exhibit the smallest monthly increase in over three years. This expectation strengthens the argument for additional rate reductions from the Fed starting September. Consequently, this could provide a base of support for various assets, such as bitcoin.

In a recent development, robust economic data has led to an increase in bond yields and a decrease in precious metal prices on Friday. This trend persists, posing a challenge for the growth of digital hard assets such as cryptocurrencies, according to Greg Magadini, the director of derivatives at Amberdata, in his weekly report to CoinDesk.

During the upcoming week, several Federal Reserve Governors are scheduled to deliver speeches. Among the key events, we have the release of the Gross Domestic Product (GDP) data and, most significantly, the Personal Consumption Expenditures (PCE) index report on Friday. Magadini emphasized.

According to a Bloomberg survey of economists, they anticipate no adjustment in the PCE price index’s overall value and a minimal 0.1% rise in the core PCE rate, which equates to around a 2.6% yearly growth for both the headline and core numbers. The forecasted increase in the core figure, not including food and energy costs, would represent the smallest gain since March 2021.