Sygnum expert Katalin Tischhauser shares insights about the current trends in Bitcoin, analyzing double top formations and the impact of institutional investments.
Careful Approach with Technical Indicators
The crypto market is known for its emotional reactions, complicating the determination of fundamental valuations. Thus, the double top formation identified in technical analysis warrants careful consideration. Bitcoin has fluctuated between $100,000 and $110,000 over a 50-day period, signaling a slowdown in bullish momentum.
Technical analysts warn that if Bitcoin’s prices fall from $110,000 to below $75,000, a further decline to $27,000 is possible, indicating a potential 75% drop from peak values. However, such significant declines are typically not solely the result of technical formations.
Increasing Institutional Participation and Market Dynamics
The existing bullish momentum is driven by heightened interest from institutional investors, rather than narrative-driven movements of previous years. Since January 2024, Bitcoin-focused investment funds on Nasdaq have reported net inflows exceeding $48 billion.
Bitcoin increasingly serves as a value storehouse for companies, with 141 public companies collectively holding 841,693 Bitcoin. These institutional purchases maintain enduring demand and provide supportive roles in pricing.
Shifts in the Halving Cycle
Historically, Bitcoin price spikes post its four-yearly halving cycle, subsequently peaking and declining. However, the latest 2024 halving may not adhere to the traditional cycle. Market dynamics are now more influenced by institutional actions, with miner sales accounting for a minimal fraction of total transaction volumes.
Experts caution that past significant downturns were triggered by political developments and sudden market shocks, with current resilience arising from liquidity and institutional interest. While exercising caution with technical indicators is advised, large-scale price crashes seem unlikely unless unforeseeable major events occur. Investors are advised to consider external market developments alongside technical indicators for a comprehensive outlook.
