Why The Double Top Narrative In Bitcoin Doesn’t Make Sense

Tony "The Bull" Severino

Last Updated: June 11, 2024 2:00 pm

3 mins read

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Bitcoin price just set a new all-time high today, and then immediately dropped $500 and is trading below the former peak once again. Murmurs of a “double top” scenario have been making rounds across the speculation-driven crypto community.

However, one well-known crypto trader and analyst explains why such a scenario is nearly impossible, due to the requirements involved in confirming the technical chart pattern.

Bitcoin Sets New All-Time High, Drops $800 Immediately After

Bitcoin price set a new all-time high of $19,863 on Binance and beat the former peak on other spot crypto exchanges like Coinbase and Bitstamp, certifying the historic moment.

Within minutes of the achievement, however, the leading cryptocurrency by market cap plunged by $800 and is back holding onto $19,000 as support.

The rejection here after a new peak was set, and even before as Bitcoin has previously stopped short of a new high, sparked discussion and wild speculation over a possible “double top” scenario.

Double tops occur when an asset peaks at or around the same resistance level at the height of two rallies. The resistance that is created, can often be unbreakable and causes a complete reversal – hence being called a “top.”

But like any chart patterns, they must meet certain requirements to “confirm” as “valid,” and according to one 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 Breaks Down Why BTC Won’t Double Top

According to DJ, analyst, and trader Scott Melker, who goes by The Wolf Of All Streets moniker on Twitter and elsewhere, a “double top” is extremely unlikely.

Melker explains that the requirements to confirm such a pattern as valid would require a break of the swing low between each of the two tops.

The swing low being Bitcoin’s bottom at $3,200. If Black Thursday couldn’t break it, most likely nothing will, and it becomes even more unlikely with the cryptocurrency so close to breaking out into a bull market.

Additionally, Melker outlines that the target of such a structure would be roughly -$16,000 – as in a negative price per BTC.

Unlike oil that requires a hefty cost to store, Bitcoin prices would not fall into negative territory. Zero is of course possible but is at this point less feasible than $100,000 per coin.

Bitcoin topping here isn’t all that bad, either. The first-ever crypto-asset could be forming a massive ascending triangle formation – a bullish technical continuation pattern.

 An ascending triangle could be forming as Bitcoin is ahead of schedule | Source: BTCUSD on TradingView.com

According to a comparison with the last crypto market cycle, Bitcoin is currently far ahead of schedule in terms of setting 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 somewhat similar trajectory.

This could imply that either there will another stretch of consolidation around current prices for the next three to six months, or that the macroeconomic environment due to the pandemic and out-of-control money printing, could be having that dramatic of an impact.

If that’s the case, being concerned with a “top” around $20,000 could be as foolish as Melker makes it out to be, as the cryptocurrency’s momentum will take it much higher before the next peak is in.

Featured image from Deposit Photos, Charts from TradingView.com

Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

Beyond his role at NewsBTC, Tony is the visionary founder of CoinChartist.io, an educational platform aimed at demystifying the nuances of cryptocurrency trading. CoinChartist.io serves as a valuable resource for traders seeking to enhance their technical analysis skills. The platform offers a range of learning tools and resources designed to empower traders with the knowledge to make informed trading decisions.

In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

Tony is also celebrated for his literary contributions to the field. He is the author of the highest-rated Crypto Trading Journal on Amazon.com, a testament to his ability to communicate complex trading concepts in an accessible manner. This journal is widely regarded as an essential tool for traders aiming to track their progress and refine their strategies.

Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.

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