Bitcoin may move towards a "double top" pattern similar to 2021

Bitcoin (BTC) has undergone a dramatic transformation over the past four years, gradually shedding unreliable centralized institutions like FTX and becoming a popular investment target in the eyes of institutional investors. However, as Bitcoin has returned to six figures this month amid easing tariff tensions, its movement is accompanied by some warning signs that are reminiscent of the situation before the 2021 cycle high.

In April 2021, Bitcoin hit an all-time high of $65,000, which was driven by active buying from MicroStrategy under Michael Saylor and major events such as the listing of Coinbase (COIN). Some savvy traders chose to short on these positive news releases, eventually shorting Bitcoin all the way to the bottom of $28,000 two months later.

At a time when the entire industry was preparing for the bear market or even the "end" of Bitcoin (such as China's total ban on mining), Bitcoin unexpectedly rebounded and started a four-month rally. The rally ultimately pushed prices to a high of $69,000, even as nearly every on-chain indicator was flashing bearish signals.

Disturbingly, today’s price action is being accompanied by similar on-chain data suggesting a “double top” structure could be forming.

A Closer Look

The first thing worth noting is the weekly relative strength index (RSI), which has seen three consecutive bearish divergences since March 2024, December 2024, and May 2025. The RSI is an indicator that measures the average gain and loss of a market over a period of time and is used to determine whether a market is overbought or oversold. A bearish divergence occurs when prices are rising but the RSI is falling.

In addition, the current volume is significantly lower than when it first broke through $100,000, which also indicates that the upward momentum is slowing down. Trading activity is decreasing in both the crypto market and institutional platforms. For example, CME's Bitcoin futures contracts have failed to break through 35,000 in three of the past four weeks, while when the market first started, the contract volume often exceeded 65,000, and even exceeded 85,000 three times. Each contract represents 5 Bitcoins (currently about $514,000).

Similar to 2021, **Open Interest** is also deviating from price trends. The current open interest is 13% lower than when it hit $109,000 in January, while the price is only 5.8% lower than then. When Bitcoin reached $69,000 four years ago, the open interest was also 15.6% lower than the initial high of $65,000, even though the price was still 6.6% higher.

What does this mean?

While there are similarities to 2021, it is important to note that the crypto market structure today is very different from that of four years ago. Michael Saylor’s strategy, and the growing number of companies that have copied him, are increasing their Bitcoin positions regardless of cost, making institutional participation in this cycle much higher than in the past.

In addition, there are spot Bitcoin ETFs that provide a path for institutions and companies to purchase BTC through regulated traditional markets.

However, 2021 also showed that on-chain indicators may not be accurate predictors of price movements. Bitcoin may hit new highs again after Trump announced that the United States will establish a national Bitcoin reserve, but such news may also become a classic "good news cash-in and sell-out" event, where traders will cash out and uninformed retail investors may take over at high prices.

The message conveyed by various indicators is that although Bitcoin may set new highs as it did in 2021, the momentum of this rise is fading. Analysts who shouted a target price of $150,000 or even $200,000 may face a grim reality if the market reverses.

At the end of 2021, Bitcoin entered a bear market that lasted more than a year. Many companies in the industry laid off severely, and many trading platforms, centralized lending companies and DeFi protocols collapsed one after another.

This time, if the price falls, the market will have to deal with more factors, such as MicroStrategy’s leveraged positions, the Bitcoin DeFi ecosystem with a total value of $6.3 billion currently locked, and a large amount of speculative funds flowing in the meme coin market - an area that often shrinks most sharply when the market is under pressure.