Bitcoin (Bitcoin) It has formed a double top price pattern, signaling a potential bearish trend change ahead of the release of key data that could influence the Fed’s interest rate movements.
Bitcoin prices have had a rollercoaster ride this month, surging to nearly $70,000 in March, close to its all-time high, before plummeting to $63,000, despite the continued rise of the Nasdaq, mainly due to accelerated selling by miners, profit-taking by investors near the all-time high, and outflows from U.S.-listed spot exchange-traded funds.
Price movement has formed a double top, a bearish technical analysis pattern consisting of two peaks and an intermediate valley, which usually appears after a significant uptrend. The second peak represents the exhaustion of the uptrend, and the eventual drop below the low between the two peaks confirms the bearish trend change.
“Technically, it looks like Bitcoin is following a double top formation, but the support levels are being tested. This chart formation should be our base case unless it is invalidated. This formation could easily lead to a drop to $50,000, let alone $45,000,” said Markus Schielen, founder of 10x Research.
“Certainly, the US election and CPI should provide a bullish boost later this year, but a sharper correction is also possible,” Seelen added.
However, the Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, is expected to post its slowest monthly increase in three years in May, which could solidify the case for another Fed rate cut starting in September and create a floor for risk assets, including Bitcoin.
“[Recent] Strong economic data [bond] “Yields rose and precious metals fell on Friday, which continues to hinder digital hard assets like cryptocurrencies,” Greg Magadini, director of derivatives at AmberData, said in a weekly newsletter shared with CoinDesk.
“Several Fed governors are scheduled to speak this week, followed by GDP and the all-important PCE (the Fed’s preferred inflation measure) on Friday,” Magadini added.
Economists surveyed by Bloomberg see the PCE price index unchanged and core PCE rising just 0.1%, bringing both the headline and core indexes to a 2.6% annual increase. The expected increase in the core index, which excludes food and energy, would be the smallest since March 2021.
