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

US elections and CPI may be a factor that could cause an increase later this year.

The Fed’s preferred inflation gauge, the PCE price index, will be released on Friday, which could provide relief.

Bitcoin {{BTC}} has formed a double-top price pattern, signaling a potential bearish reversal ahead of fundamental data that could impact the Fed’s interest rate path.

Bitcoin’s price journey has been a rollercoaster this month. After rising to nearly $70,000 and approaching its all-time high in March, it is now down to $63,000; That’s a departure from the Nasdaq’s continued rally, largely driven by miners selling faster, investors taking profits near lifetime highs and stock market exits. Spot exchange-traded funds listed in the United States.

The price action formed a double top, a bearish technical analysis pattern consisting of two peaks with a valley in the middle, which usually occurs after a significant uptrend. The second peak represents the exhaustion of the uptrend, and the eventual break of the low between the two peaks confirms the downtrend reversal.

“Technically, Bitcoin appears to be following a double top formation, but the support level is being tested. This chart pattern should be our base case unless it is invalidated. This pattern could easily see a drop to $50,000, if not $45,000,” Markus Thielen said. The founder of 10x Research said:

“Yes, the US elections and the CPI will rise later this year, but we could still experience a harsher correction,” Thielen added.

BTC’s double top. (10x Research)

But May’s personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, is expected to show the slowest monthly increase in the core figure in three years. This would strengthen the Fed’s case for renewed interest rate cuts starting in September and potentially put a floor under risk assets including Bitcoin.

“[Recent] Strong economic data challenged us [bond] Yields rose on Friday while precious metals fell. “This continues to lag digital hard assets like crypto,” Greg Magadini, director of derivatives at Amberdata, said in a weekly newsletter shared with CoinDesk.

“On Friday this week, multiple Fed Governors will talk about GDP and most importantly PCE (the Fed’s favorite inflation indicator),” Magadini added.

Economists surveyed by Bloomberg expect no change in the PCE price index and only a 0.1% increase in the core PCE; This means a 2.6% annual increase in both headline and core figures. The projected core increase, excluding food and energy, will be the lowest increase since March 2021.