On Wednesday (July 10), Bitcoin's rebound seemed to be exhausted, and the price of the currency fell slightly to $57,800. Bitcoin formed a double top technical model on the weekly chart. Generally speaking, a double top is a bearish pattern, indicating that the downward trend may continue. But observing the market now, the bottoming wave seems to be beginning to appear, and bulls and bears are beginning to quarrel fiercely.

Two major negative factors: Mt.Gox repays debts and the German government sells Bitcoin

The two major negative factors, namely the repayment of creditors by Mt.Gox, the former largest crypto exchange, and the large-scale sale of Bitcoin by the German government, continue to affect the trend of Bitcoin. The German government sold about 3,100 Bitcoins worth about $178 million in one hour on Tuesday, and continued to sell Bitcoin thereafter.

Meanwhile, the German government withdrew approximately 1,700 bitcoins, reclaiming approximately $91.78 million worth of bitcoin holdings from the Bitstamp exchange.

The German government also moved another 3,107 Bitcoins from its main holdings, possibly preparing for further sell-offs. The main government address currently holds about 26,000 Bitcoins worth $1.5 billion, while the address used to offload holdings currently holds 4,800 Bitcoins worth $276.61 million.

Wall Street traders see a 72% chance of a September rate cut by the Federal Reserve, so lower interest rates could help spur investment in Bitcoin.

This macroeconomic trend tends to have a significant impact on assets such as Bitcoin, as it is still considered a risk asset, unlike assets such as gold that see liquidity inflows during periods of geopolitical instability.

Coincident with the Bitcoin sell-off, a decline in Bitcoin miner operational activity and reserve selling suggests that market sentiment may be near a bottom.

Bitfinex analysts said that even though Mt. Gox has begun repaying Bitcoin and Bitcoin Cash (BCH), market data on July 6 and 7 still shows this local bottom.

Despite the sell-off in Bitcoin due to the German government and Mt. Gox paying its creditors, there are multiple indicators that Bitcoin is ready to rebound.

Bitcoin fell to its lowest point since late February, hitting $53,550, before recovering to its current high of $57,600.

The relative strength index (RSI) indicator shows a growing gap between falling prices and rising RSI values, suggesting that selling pressure is waning.

Bitcoin "double top" technical model: bulls and bears argue fiercely

Dr. Martin Hiesboeck, head of research at Uphold, recently spotted a double top pattern on the weekly chart. For the market, a double top is a bearish pattern that indicates that the downtrend may continue. A double top forms when the price of an asset reaches a high twice, with a moderate decline between the two peaks. If the price then falls below the level of the middle low, the pattern is confirmed and indicates further declines.

Bitcoin’s first high occurred in mid-March when the asset surged to an all-time high of $73,873. It has since experienced a mild decline before hitting a second high in early June when it surged to $72,000.

In the recent price drop, Bitcoin fell below the area near the neckline, which is the $60,000 level. Therefore, the possibility of a series of larger declines is high, and Hiesboeck previously urged investors to manage risks appropriately.

The bull camp took a stand, with trading legend Peter Brandt raising the question in a post whether Bitcoin has completed a double top pattern, which suggests a potential minimum target of $44,000. Brandt’s analysis is supported by the Bitcoin price chart, where he projected his expectations. The level around $44,000 is marked, indicating that there is significant downside risk if the double top pattern is confirmed.

However, the outlook is not entirely bearish because for a true double top to form, the depth of the Bitcoin top needs to be around 20% of the price, while the current depth is only around 10%.

The bears are not far behind. DonAlt, a crypto strategist with 569,900 followers on Twitter, expressed his bearish attitude towards many altcoin projects on Twitter.

“To be honest, I am much more pessimistic about altcoins than I am about Bitcoin. Imagine that Bitcoin is trading at over $100,000 in the next few years, while altcoins are trading at 90% less than they are now.”

He questioned the usefulness of many digital assets other than Bitcoin. "Think about the market cap of cryptocurrencies, it's crazy. Yes, these currencies have fallen a lot. But they're also over $1 billion in market cap, what on earth can these things do?"

However, DonAlt does not think Bitcoin will hit six figures anytime soon. He said Bitcoin has been repeatedly forming a bearish double top pattern on the daily chart and he thinks it is too early to get bullish again.

"It's only five times. I really can't blame anyone for being fooled. As the saying goes? Fool me once, shame on you. Fool me twice, shame on you. Fool me five times, shame on you still."

The veteran trader said he is reluctant to be bullish on Bitcoin because he believes it could see a repeat of its November 2018 crash, when Bitcoin fell below $6,000 after six months of consolidation in a narrow range. Bitcoin did not bottom until it hit nearly $3,000.