Bitcoin Might Repeat the 2021 Double Top Pattern
Several indicators hint at Bitcoin experiencing a decline in momentum while trying to reach its high of January, which was just over $109,000.
What to Know:
- Various metrics indicate a potential repeat of the 2021 double top pattern.
- The weekly RSI (Relative Strength Index) shows bearish divergence as trading volume decreases across both crypto and institutional platforms.
- Bitcoin’s price peaked in 2021, reaching close to $70,000 before entering a long bear market.
Bitcoin (BTC) has significantly evolved over the past four years, distancing itself from dubious centralized entities like FTX. This month, however, as it attempts a return to six-figure values amid easing tariff tensions, several warning signs arise that mirror the situation from 2021.
In April 2021, Bitcoin attained an all-time high of $65,000, coinciding with increased activities from Michael Saylor’s MicroStrategy and Coinbase’s IPO. Traders capitalized on excitement, short selling the currency as it fell to a low of $28,000 two months later.
Continued Trends
As the industry braced for a prolonged bear market, Bitcoin unexpectedly surged for four months, achieving a new high of $69,000 in stark contrast to the current on-chain metrics suggesting potential bearish outcomes.
Currently, several on-chain metrics echo similar concerns to those seen in 2021. The weekly RSI shows bearish divergence from March 2024 through May 2025, indicating potential overbought conditions, while price trends upward.
Low trading volumes during this latest price surge signal waning momentum. Last week’s trading volumes on CME BTC futures hovered around 35,000 contracts, considerably less than the 65,000 contracts that regularly surpassed 85,000 during the initial surge.
Additionally, open interest is 13% lower than the drive to $109K in January while prices are merely 5.8% off the mark. The pattern mirrors the market conditions seen during Bitcoin’s 69,000 peak.
Conclusions
The parallels to 2021’s market are apparent, yet the crypto landscape has transformed dramatically since then, largely due to institutional involvement and the introduction of spot Bitcoin ETFs that provide a regulated avenue for investors.
Nonetheless, past indicators may not accurately predict future price actions. Bitcoin might very well break new records, influenced by external factors and speculative trader behavior. Indicators suggest that even if a new high is achieved, sustaining that momentum could prove challenging.
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