Bitcoin’s potential double top formation above $100,000 raises a yellow flag ⚠️, suggesting caution. However, Sygnum Bank’s Head of Investment Research, Katalin Tischhauser, told CoinDesk that a crash mirroring the severity of 2022 is unlikely unless a significant “black swan” event occurs.
“Bitcoin’s potential double top above $100,000 raises caution, but a crash like 2022 is unlikely without a black swan event, Sygnum’s Head of Investment Research Katalin Tischhauser told CoinDesk.”
Tischhauser attributes the current bull market’s greater resilience to the influence of institutional investment, contrasting it with previous cycles. She also suggests that the traditional four-year halving cycle may no longer be the primary driver of Bitcoin’s price, given the increased institutional adoption.
Bitcoin’s double top prospects above $100,000 warrant caution, but a full-blown 2022-style crash looks unlikely unless an unexpected black swan hits, according to digital asset banking group Sygnum’s Head of Investment Research Katalin Tischhauser.
“The crypto market is strongly sentiment-driven as fundamental valuations are challenging; therefore, technical analysis signals such as the double top warrant caution. That said, a full-blown crash needs a catalyst like the Terra collapse of 2022 or the FTX blowup. Barring a similar black swan, we could see a prolonged bull cycle, based on the current political and regulatory support and sticky institutional capital flowing in,” Tischhauser told CoinDesk in an interview.
Double Top Formation: A Cause for Concern?
Bitcoin has spent approximately 50 days fluctuating between $100,000 and $110,000, which some analysts interpret as a sign of exhaustion in the uptrend that peaked in January. Veteran technical analyst Peter Brandt, amongst others, has noted the possibility of a bearish trend reversal based on a potential double-top pattern.
A double top is characterized by two successive price peaks at roughly the same level (around $110,000 in Bitcoin’s case), with a “neckline” or trendline drawn through the lowest point between those peaks. For Bitcoin, this low point corresponds to the dip to $75,000 in early April.
The concern lies in the potential for a “double top breakdown.” This would involve a downturn from $110,000 followed by a breach of the $75,000 neckline, potentially triggering a significant price drop to approximately $27,000. Such a scenario would represent a 75% decline from the recent highs.
Technical patterns like the double top can become self-fulfilling prophecies. As traders identify the pattern, their collective actions can reinforce the anticipated outcome, leading to increased selling pressure.
Beyond Technicals: The Importance of Fundamental Factors
However, technical analysis alone rarely causes such a drastic 75% price collapse. The 2022 crash, which saw Bitcoin plummet from $70,000 to $16,000, was driven by a combination of factors, including the Federal Reserve’s rate hikes, which exposed vulnerabilities in speculative asset classes like crypto. This environment then facilitated the collapse of Terra and FTX, leading to substantial wealth destruction.
Institutional Flows Driving Resilience
This current rally, however, is primarily fueled by institutional investment flows, rather than speculative narratives surrounding DeFi or Ethereum, as pointed out by Bloomberg’s Joe Weisenthal.
Since their launch on the Nasdaq in January 2024, the 11 spot Bitcoin ETFs have accumulated net inflows exceeding $48 billion, according to data from Farside Investors. Additionally, increasing adoption of Bitcoin as a corporate treasury asset is contributing to the bullish momentum. As of this writing, 141 public companies hold 841,693 BTC, according to bitcointreasuries.net.
This “flows-driven” nature of the current bull run makes it more robust compared to previous market cycles, according to Tischhauser.
“Institutions implement rigorous due diligence and risk assessment before they add a new asset class like bitcoin to the model portfolio. But when they do, the eventual allocation is for the long term. This trend of sticky institutional allocation is just beginning, and the resulting demand will continue to provide price support for some time to come,” Tischhauser told CoinDesk.
Tischhauser suggests that these investment vehicles are absorbing liquidity, creating a supply-demand imbalance that favors continued price appreciation.
“These investment vehicles are sucking liquidity out of the market, which means, every time a new big-ticket investor hits the market with bids, this is addressing less and less supply, and the bullish impact on prices becomes more pronounced,” Tischhauser noted.
The Halving Cycle: Is It Obsolete?
The bearish double-top scenario gains plausibility from the historical context: post-halving years have often marked bull market peaks, followed by year-long bear markets.
The Bitcoin halving is a programmed event that reduces the rate of new Bitcoin creation by 50% every four years. The most recent halving occurred in April 2024, reducing the block reward to 3.125 BTC from 6.25 BTC.
However, Tischhauser contends that the influence of sticky institutional adoption could override the traditional halving cycle, as miners account for a tiny percentage of the average daily trading volume now.
“The change in market leadership means the four-year halving cycle may not play out religiously as it did before. Earlier, most BTC holders were miners, and the BTC issued per year was a huge percentage of the outstanding bitcoin supply. So, selling pressure from miners mattered greatly to the market price. Now, the BTC mined is 0.05-0.1% of the average BTC daily trading volume and halving this supply has no impact on the supply/demand balance in the market. So the halving cycle may be dead,” Tischhauser concluded.
