Bitcoin price just hit a new all-time high today and then immediately fell by $ 500 and is trading back below the previous high. The murmur of a “double top” scenario has caused a sensation in the speculation-driven crypto community.
However, a well-known crypto trader and analyst explains why such a scenario is nearly impossible due to the requirements for confirming the technical chart pattern.
Bitcoin sets new all-time high and immediately drops USD 800
Bitcoin price hit a new all-time high of $ 19,863 on Binance, beating previous highs on other crypto exchanges like Coinbase and Bitstamp, confirming the historic moment.
However, within minutes of hitting it, the leading cryptocurrency by market capitalization fell $ 800 and is holding back $ 19,000 as support.
The rejection here, after setting a new high, and even before, when Bitcoin had previously stalled near a new high, sparked discussion and wild speculation about a possible “double-top” scenario.
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Double tops occur when an asset peaks at or around the same level of resistance during two rallies. The resistance that is created can often be unbreakable and cause a complete reversal – hence it is called the “spike”.
But like any chart pattern, they have to meet certain requirements in order to be “validated” and according to a well-known crypto trader the scenario is just nonsense.
A Bitcoin double top requires bottom support to break down | Source: BTCUSD on TradingView.com
Crypto Trader Crashes Why BTC Doesn’t Double Top
According to DJ, analyst and trader Scott Melker who stops by The nickname Wolf of All Streets on Twitter and elsewhere a “double top” is extremely unlikely.
Melker explains that the requirements to validate such a pattern would require a break in the low between each of the two tops.
The swing low for Bitcoin is $ 3,200. If Black Thursday couldn’t break it, it most likely wouldn’t do anything, and it becomes even less likely with the cryptocurrency so close to breaking into a bull market.
In addition, Melker outlines that the goal of such a structure would be around $ 16,000, like a negative price per BTC.
Unlike oil, which is expensive to store, Bitcoin prices would not fall into negative territory. Zero is possible, of course, but less feasible than $ 100,000 per coin at this point.
The bitcoin topping here isn’t all that bad either. The first crypto asset could form a massive ascending triangle formation – a bullish technical continuation pattern.
Ein aufsteigendes Dreieck könnte sich bilden, da Bitcoin dem Zeitplan voraus ist Quelle: BTCUSD auf TradingView.com
After comparing it to the last crypto market cycle, Bitcoin is currently well ahead of schedule to hit a new all-time high. With Bitcoin halving theories based on a four-year block reward reduction mechanism, market cycles are expected to follow a similar pattern.
Related reading | Here’s what happens to altcoins when bitcoin exceeds $ 20,000
This could mean that either there will be another phase of consolidation around current prices in the next three to six months or that the macroeconomic environment could have such a dramatic impact due to the pandemic and runaway money pressures.
If so, it might be as stupid to deal with a “top” around $ 20,000 as Melker imagines, since cryptocurrency momentum will be much higher before the next peak is reached.
Featured image from Deposit Photos, Charts from TradingView.com