Three weeks ago, investor Jeffrey Gundlach said he believed the price movement of the world’s No. 1 cryptocurrency was forming a “double top.” That’s a bearish technical reversal pattern that happens when an asset price hits two consecutive peaks with a modest decline in between and then goes off a cliff after the second peak.
After climbing to a then-record high above $66,000 on Oct. 20, Bitcoin fell to above $58,000. Then Bitcoin’s price set a new record high earlier this week of more than $69,000 and other market watchers are echoing Grundlach’s double-top prediction.
“With all this re-energized NFT ‘bubblehead’ activity, odds favor a ‘double top’ in BTC & crypto crashing again,” The Moguldom Nation CEO Jamarlin Martin tweeted.
“BTC could be at a double top,” trader @sonaliranade tweeted on Nov. 11.
Bitcoin was trading at $63,965.02 as of this writing. “An immediate support is near the USD 63,200 level, below which the price might test USD 62,500. The next key support is near the USD 62,000 level,” Aayush Jindal reported for CryptoNews.
“Increased selling pressure may allow bears to drive prices back towards the $58,000 handle and a potential retest of $55,000,” analyst Tammy Da Costa wrote for DailyFX.com.
A double top is only confirmed once the asset’s price falls below a specific support level equal to the low between the two prior highs, according to Investopedia. It signals a medium or long-term trend change in an asset class. For example, Amazon stock showed a double top pattern between September and October 2018 around a price of $2,050. The important support level in this case formed around $1,880. The double top could not be confirmed until after the stock fell below $1,880. From that point forward, the shares plunged almost 31 percent. Amazon is currently trading at $3,472.50.
Gundlach is the founder of investment firm DoubleLine Capital LP, which manages more than $140 billion in assets. Back in July, his near-term outlook on Bitcoin was pessimistic, CNBC reported. At that time, Bitcoin was trading around $31,200 and struggling to recover after reaching its mid-April peak of close to $65,000.
“The chart is scarier today than it was in July because we have a double top at 60-plus thousand [dollars] that we basically did a blow off this week,” Gundlach said in an Oct. 22 interview on CNBC’s Halftime Report. “Now we’ve reversed back below where the top was.”
When the U.S. Securities Exchange Commission approved in October a Bitcoin-linked exchange-treaded fund, the Bitcoin price rose to a new all-time high. “Bears are in shambles,” tweeted Dylan LeClair, co-founder of 21stParadigm. But then the cryptocurrency began to fall rather than blasting off with a renewed momentum. “Now, a double top narrative is brewing,” TechNewsInc reported.
Many analysts argue that Bitcoin is anything but bearish, despite losing $4,000 in a single day on Wednesday and trending sideways since, Cointelegraph reported.
“We remain bullish on high time frames and continue to expect price to rally up to the $85,000 – $90,000 region in the coming weeks,” trading platform DecenTrader wrote in its latest market update on Nov. 12.
“This price action shows us that we are currently in a multiyear bearmarket,” Yoyo Villamen tweeted @bong_gonggong . “#Bitcoin #Bitxoin #Bitcoim has just formed a double top , and is done with its dead cat bounce and giant bull trap back down to 18k, then to sub-1k around $700-770 . $BTC”.
Others on Twitter urged investors to stay calm. “Now expect some bears to come and say ‘ we told you so’ and claim how 69k was the ‘double top’. Stay calm and keep cash. Thats why we never advise leverage trading” Knowledge_of_ investing tweeted @smart_M0NEY.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
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