Bitcoin forms a double top – price could crash to $50,000

Bitcoin (BTC) recently formed a double top pattern that indicates a potential bearish trend reversal ahead of the release of important data that could influence the Federal Reserve's interest rate decisions.

The price of Bitcoin experienced significant volatility this month. After climbing to almost $72,000, near the all-time high reached in March, it fell back to below $62,000.

The price action created a double top pattern – a bearish technical indicator characterized by two consecutive tops, usually following a significant uptrend.

The second peak signals the end of the uptrend, and a break of the bottom between the two peaks confirms the reversal to the bearish trend.

"Technically, Bitcoin appears to be following a double top formation with the support level being tested. This formation should be our baseline scenario unless disproved. It could easily lead to a drop to the $50,000 level, if not to $45,000said Marcus Thielen, founder of 10x Research.

According to him "however, we may witness a steeper correction', although the US election and CPI may add bullish sentiment later in the year.

Still, the Federal Reserve's preferred gauge of inflation -- the personal consumption expenditures (PCE) price index for May -- is expected to show the slowest monthly increase in the core gauge in more than three years. That would strengthen the Fed's case for resuming interest rate cuts in September, potentially supporting risk assets including Bitcoin.