Bitcoin
Bitcoin (BTC) Reaches Double Top Ahead of Fed’s Preferred Inflation Reading
Bitcoin (BTC) created a double top price pattern, signaling a potential bearish trend change ahead of the release of important data that could influence the Fed’s interest rate path.
Bitcoin’s price journey has been a rollercoaster this month. After rising to almost $70,000, approaching March’s all-time high, it has now retreated to $63,000, decoupling from The continued upward movement of the Nasdaq, largely due to faster sale by miners, profit-taking by investors near all-time highs, and outflows from US-listed exchange-traded funds.
The price action has formed a double top, a bearish technical analysis pattern comprising two peaks with a trough in between, usually appearing after a notable uptrend. The second peak represents the exhaustion of the uptrend, with the eventual break of the low between the two peaks confirming a change in the downtrend.
“Technically, bitcoin appears to be following a double top formation while the support level is being tested. This chart formation should be our base case unless it is invalidated. This formation could easily see a drop to $50,000 – if not $45,000,” Markus Thielen , founder of 10x Research, said.
“Yes, the US elections and CPI should be bullish later this year, but we could still see a sharper correction,” Thielen added.
However, the Fed’s preferred inflation measure, the personal consumption expenditures (PCE) price index for May, is expected to post the slowest monthly advance in the core value in more than three years. This would cement the case for further Fed rate cuts starting in September, potentially putting a floor on risky assets including bitcoin.
“[Recent] Strong economic data forced [bond] yields more and precious metals fall on Friday. This continues to disrupt digital assets like crypto,” said Greg Magadini, director of derivatives at Amberdata, in the weekly newsletter shared with CoinDesk.
“This week we have several Fed governors talking, GDP and, more importantly, PCE on Friday (the Fed’s favorite inflation indicator),” Magadini added.
Economists surveyed by Bloomberg expect no change in the PCE price index and a meager 0.1% increase in core PCE, totaling 2.6% annual advances in both the headline and core numbers. The projected core increase, excluding food and energy, would be the smallest since March 2021.