- Bitcoin’s double top pattern could signal a drop to $50,000 if the support level is breached.
- Upcoming PCE data may support Fed rate cuts, potentially stabilizing Bitcoin prices.
- Economic data influences Bitcoin, with recent trends pushing bond yields higher and precious metals lower.
Bitcoin (BTC) is exhibiting signs of a potential bearish trend change ahead of a key data release that could influence the Federal Reserve’s interest rate decisions. Bitcoin’s price has experienced volatility this month, surging to nearly $70,000 before retreating to $63,000. This divergence from Nasdaq’s continued upward movement is attributed to increased selling by miners, profit-taking by investors near all-time highs, and outflows from U.S.-listed spot Bitcoin ETFs.
The recent price action has formed a double top, a bearish technical analysis pattern characterized by two peaks with a valley in the middle, often appearing after a significant uptrend.
The second peak signals potential uptrend exhaustion, with a breach of the low between the two peaks confirming a bearish trend change. Bitcoin’s support level is currently under pressure, and if this double top formation holds, prices could fall to $50,000 or even $45,000.
Despite the U.S. election and Consumer Price Index (CPI) potentially offering bullish momentum later this year, a steeper correction remains possible. The Fed’s preferred inflation measure, the Personal Consumption Expenditures (PCE) price index for May, is expected to show the slowest monthly advance in the core figure in over three years. This could bolster the argument for renewed Fed rate cuts starting in September, potentially stabilizing risk assets, including Bitcoin.
Recent strong economic data has pushed bond yields higher and precious metals lower, affecting digital assets like Bitcoin. This week, multiple Fed Governors are scheduled to speak, with GDP and PCE data expected on Friday.
Economists surveyed by Bloomberg anticipate no change in the PCE price index and a slight 0.1% increase in the core PCE. This would result in annual increases of 2.6% for both the headline and core figures. The projected core increase, excluding food and energy, would be the smallest since March 2021.
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