Bitcoin Price Faces Bearish Breakout Risk Amid Hash Rate Decline and Bearish Divergence
Bitcoin’s price remained in a tight range on Saturday, with the hash rate falling and a bearish divergence forming, increasing the risk of a bearish breakout. As of the last check, Bitcoin was trading at $94,296, as the market reacted to the latest report from the Bureau of Labor Statistics showing that the U.S. economy created over 256,000 jobs, and the unemployment rate fell to 4.1%.
Market Reaction and Economic Indicators
The positive employment report led to a decline in American equities, with the Dow Jones and Nasdaq 100 indices falling by 697 and 317 points, respectively. The bond market continued its sell-off, with the 30-year yield rising to 5.0%. The 10- and 5-year yields rose to 4.76% and 4.57%, respectively, indicating that the market expects the Federal Reserve to maintain a hawkish tone, which typically affects risky assets like Bitcoin and altcoins.
Bitcoin Hash Rate and On-Chain Data
According to data by IntoTheBlock, Bitcoin’s hash rate has retreated in the past few days, with a hash rate of 750 TH/s on Saturday, Jan. 11, lower than the 30-day high of 911.88 TH/s and the 30-day average of 793 TH/s. A hash rate is an important number that looks at the speed at which mathematical puzzles in the network are being solved.
More on-chain data shows that the number of active Bitcoin addresses has retreated to 775,000 from 900,000 on Monday, a sign that some traders have started to sell. Additionally, all spot Bitcoin ETFs had outflows totaling $572 million in the last two consecutive days.
Bearish Divergence and Chart Patterns
The daily chart shows that Bitcoin is at risk of a bearish breakout, having formed the head and shoulders chart pattern, whose neckline is at $90,952. This is one of the most popular bearish patterns in trading. Bitcoin’s Relative Strength Index and the MACD indicators have formed a bearish divergence pattern, with the MACD’s histograms moving below the zero line.
Therefore, a break below the H&S’s neckline at 90,950 risks further downside. The first support of this will be the 200-day moving average at $78,285 followed by $73,985, the highest point in March last year.
Positive Outlook and Bullish Pennant Chart Pattern
On the positive side, Bitcoin price is forming a bullish pennant chart pattern on the weekly chart. This pattern will remain in play as long as it is above $90,000.
For Bitcoin investors, it’s essential to keep a close eye on the hash rate, on-chain data, and chart patterns to make informed decisions.
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