Bitcoin (BTC) has recently formed a double top pattern, indicating a potential reversal of the bullish trend before the release of important data that could impact Federal Reserve interest rate decisions.
Bitcoin’s price has experienced significant volatility this month. After reaching nearly $72,000, close to its historical high reached in March, it fell back to below $62,000.
The price action created a double top pattern – a bearish technical indicator characterized by two consecutive peaks, typically following a significant uptrend.
The second peak signals exhaustion of the uptrend, and a break below the trough between the two peaks confirms the reversal to a bearish trend.
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“From a technical standpoint, it appears that Bitcoin is following a double top formation, with the support level being tested. This formation should be our base scenario unless proven otherwise. It could easily lead to a drop to the $50,000 level, if not $45,000,” said Markus Tilen, founder of 10x Research.
According to him, “we might still witness a steeper correction,” although the US elections and the consumer price index could add bullish sentiments later in the year.
However, the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) price index for May, is expected to show the slowest monthly increase in the core indicator in over three years. This would strengthen the arguments for the Fed to resume interest rate cuts in September, potentially supporting risk assets, including Bitcoin.