Bitcoin price remained within a narrow range on Saturday as the hash rate declined and a bearish divergence pattern formed, increasing the risk of a bearish breakout.
At the time of writing, Bitcoin (BTC) was trading at $94,296, with the market reacting to the latest report from the Bureau of Labor Statistics, which revealed that the U.S. economy had added over 256,000 jobs, causing the unemployment rate to drop to 4.1%.
Consequently, American equities experienced a decline, with the Dow Jones and Nasdaq 100 indices falling by 697 and 317 points respectively.
As anticipated by ethdaily.net, the bond market continued to sell off, resulting in the 30-year yield rising to 5.0%. Additionally, the 10-year and 5-year yields increased to 4.76% and 4.57% respectively. These rising yields indicate that the market expects the Federal Reserve to maintain a hawkish stance, which typically has an impact on risky assets such as Bitcoin and altcoins.
Meanwhile, data from IntoTheBlock reveals that Bitcoin’s hash rate has declined in recent days as its price has remained stagnant. On Saturday, January 11th, its hash rate stood at 750 TH/s, lower than the 30-day high of 911.88 TH/s and the 30-day average of 793 TH/s.
The hash rate is an important metric that measures the speed at which mathematical puzzles within the network are being solved.
Further on-chain data indicates that the number of active Bitcoin addresses has dropped from 900,000 on Monday to 775,000, suggesting that some traders have begun to sell. For instance, according to SoSoValue, all spot Bitcoin ETFs experienced outflows totaling $572 million over the past two consecutive days.
Bitcoin price forms a bearish divergence pattern on the daily chart. It has formed a risky head and shoulders chart pattern, with the neckline at $90,952. This is one of the most commonly observed bearish patterns in trading.
Bitcoin’s Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) indicators have also formed a bearish divergence pattern. The MACD’s histograms have moved below the zero line.
Hence, if Bitcoin breaks below the neckline of the head and shoulders pattern at $90,950, there is a risk of further downside. The first level of support in this scenario will be the 200-day moving average at $78,285, followed by $73,985, which was the highest point in March last year.
On a positive note, as we mentioned earlier this week, Bitcoin price is forming a bullish pennant chart pattern on the weekly chart. This pattern will remain valid as long as Bitcoin stays above $90,000.