Bitcoin Forms Double Top Pattern, Likely to Drop to $50,000?

Bitcoin has formed a double top pattern, signaling a potential downtrend with analysts predicting a decline towards $50,000.

Bitcoin Forms Double Top Pattern, Likely to Drop to $50,000?

The cryptocurrency market at the beginning of the week on June 24 continues to face significant selling pressure, with Bitcoin dropping to $62,000 and Ethereum to $3,300, dragging down other altcoins as well.

Fluctuations in leading cryptocurrencies compared to one day ago. Screenshot from Coin360 at 02:30 PM on June 24, 2024

4-hour chart of BTC/USDT pair on Binance at 02:30 PM on June 24, 2024

The question now is whether Bitcoin's price will continue to decrease and if so, how low could it go?

Looking at the price chart, many analysts have identified a double top pattern and speculate the possibility of a deeper decline towards the $50,000 level.

Markus Thielen, founder of 10x Research, shared his prediction:

"Technically, Bitcoin appears to be following a double top pattern, with continuous retesting of support levels.

We believe the price is likely to follow this formation, barring any unexpected developments. With this price pattern, a drop to $50,000 – potentially even $45,000 – could easily be seen."

A double top is a technical pattern that signals a potential reversal or continuation of a downtrend if successfully completed.

Its significance lies in the fact that buyers attempt to push the price higher, forming a second peak higher than the first, but fail. Sellers then enter the market, attempting to push the price below the previous low (also known as the neckline of the pattern), thus breaking the uptrend.

Not only does technical analysis indicate a downtrend, but fundamental market factors also support this view. Most notably, the Bitcoin spot ETF funds have been net sellers for several days, starting from June 11 when the streak of 19 consecutive inflow days ended, causing Bitcoin to drop to $67,000. Subsequently, on June 14, the largest outflow day since early May was observed.

As Coin68 has explained, the performance of Bitcoin ETF funds directly reflects on the BTC price. When ETFs are net buyers over several consecutive days, they push the BTC price up. Conversely, negative net flows indicate selling pressure from large funds, driving BTC prices down.

Additional selling pressure on BTC comes from a new player: the German government. Officials have sold $195 million worth of Bitcoin, still holding over $3 billion.

Some members of the crypto community speculate that the reason for the German government's current Bitcoin sales is to bolster defense budgets in response to potential additional risks from the Russia-Ukraine conflict, which remains in a stalemate two years after the war began. Therefore, it is likely that the remaining BTC in the wallet will continue to be sold.

Furthermore, Mt. Gox remains a factor, with their recent transfer of $9.6 billion in Bitcoin to a new address on May 28. Former CEO Mark Karpeles of the exchange clarified that this was merely a transfer for allocation purposes, not a sale of Bitcoin.

However, Mt. Gox still needs to sell coins this year to facilitate compensation for victims.

All these factors paint a pessimistic outlook for the market in the coming months. It seems the community can only hope for the 2024 US Presidential Election, with candidate Donald Trump positioning himself as the "Crypto President."

Even billionaire Mark Cuban acknowledges that crypto voters will influence the election.

Markus Thielen agrees with the above opinions but remains open to the possibility of a more significant correction:

"Yes, the US election and the potential CPI increase later this year are bullish signals. However, we could still see a more pronounced correction than before."