After Bitcoin’s Return to $100,000, Technical Indicators Signal “Double Top” Risk

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Historical Repetition? The 2021 Bull Market Trend Reappears

CoinDesk analyst Oliver Knight pointed out that Bitcoin reached an all-time high of $65,000 in April 2021, when market highlights included the aggressive accumulation by MicroStrategy and the listing of Coinbase. However, this surge quickly retraced, falling to $28,000 just two months later.

Despite this, Bitcoin subsequently embarked on a four-month rebound, ultimately reaching a new high of $69,000 in November, defying the generally bearish expectations in the market.

The current technical trend bears a striking resemblance to that year. Since March 2024, Bitcoin’s weekly RSI indicator has shown three instances of “bearish divergence,” where prices continue to reach new highs while the RSI trends downward, indicating a gradual decline in bullish momentum.

Volume and OI Divergence, Market Momentum Weakens

According to CME Bitcoin futures data, recent trading volumes are significantly lower than the levels seen when prices broke above $100,000 at the beginning of the year. Over the past four weeks, the trading volume for futures contracts has not exceeded 35,000 in three of those weeks, while the highs at the beginning of the year frequently surpassed 65,000, even reaching 85,000 at times. Each contract represents 5 Bitcoins, currently valued at approximately $510,000.

Additionally, the Open Interest (OI) for contracts has shown a clear divergence from prices. Currently, OI has decreased by 13% compared to January’s price peak of $109,000, while prices have only dropped by 5.8%. Knight pointed out that this aligns closely with the situation in 2021: Bitcoin rose from $65,000 to $69,000, but OI decreased by 15.6%.

Market Structure Has Changed, Yet Potential Risks Remain

It is worth noting that while the technical aspects are similar to 2021, the current market structure is significantly different. The driving force behind this rally comes from increased institutional participation and compliant capital entering the market, such as companies like MicroStrategy continually expanding their Bitcoin holdings and the launch of spot Bitcoin ETFs, allowing traditional investors to allocate BTC through regulated platforms.

However, even so, if history repeats itself and the market weakens, this round may bring about more complex risk factors, including:

• MicroStrategy’s highly leveraged Bitcoin position.
• A total locked value (TVL) of $6.3 billion in the Bitcoin DeFi ecosystem.
• The meme coin funding bubble, which is prone to collapse under market pressure.

While there may still be potential for new highs in the short term, both technical and trading signals indicate that the bullish momentum in this round has significantly weakened, and future market developments should be observed with caution.