Why is the price of Bitcoin down today?

Bitcoin (BTC) fell more than 3% below $91,000 on January 13, as traders trimmed their bets on a Federal Reserve interest rate cut in 2025, signaling a decline in riskier assets.

Strong US payroll data pushes Bitcoin lower

On January 10, the US Bureau of Labor Statistics reported a 256,000 increase in nonfarm payrolls, beating forecasts in a Bloomberg survey. The unemployment rate unexpectedly fell to 4.1%, while average hourly earnings rose 0.3% in December.

Annual revisions showed July's unemployment high, initially reported at 4.3%, was revised lower, indicating a more robust labor market over the summer. The figures reinforce the Fed's cautious approach, with policymakers planning just two rate cuts for 2025 as they face challenges to meeting their 2% inflation target.

Bond traders, for example, won't see rates cut until September, according to CME data.

Higher interest rates increase the likelihood of holding yielding assets such as US Treasuries. In turn, traders' appetite for riskier assets such as cryptocurrencies and stocks has decreased.

Bitcoin's decline today, therefore, is part of the growing threat of risk, which is reflected in the decline in major US stock indexes. On the other hand, yields on both short-term and long-term US Treasury bonds rose.

Consumer and wholesale price reports due Jan. 14 and 15 will provide additional insights into inflation trends ahead of the Jan. 28-29 federal policy meeting.

Americans expect prices to rise at an annual rate of 3.3% over the next five to 10 years, up from 3% in December, according to a preliminary January survey by the University of Michigan.

Short-term expectations also rose, with consumers predicting a 3.3% increase in spending next year, a jump of 0.5 percentage points from last month.

Sticky inflation, therefore, may limit the Fed's chances of tapering in the coming months, which is why the Bitcoin market is now sliding into depression.

Bitcoin NUPL hints at a bearish reversal

Bitcoin's Net Unrealized Profit/Loss (NUPL) indicator has entered the “belief-denial” zone, historically associated with local market highs. This metric measures the unrealized profit or loss of Bitcoin owners, and reaching this zone often indicates optimism in the market.

As Bitcoin hovers in this zone, selling pressure from profit-seeking investors appears to push prices lower. Holders who accumulated during the earlier stages of the rally may be cashing in, increasing supply and putting pressure on the price of BTC.

Historically, a “belief-denial” phase often precedes corrections when market sentiment begins to change. The current decline in Bitcoin prices may reflect these dynamics, with traders bracing for further consolidation or a potential decline in the near term.

Bitcoin H&S pattern hints at $76,750

Today's decline in Bitcoin price is part of the current Head and Shoulders (H&S) pattern.

The H&S pattern is a classic technical analysis formation that indicates a trend reversal. It consists of three ends: the highest in the middle (head) flanked by two lower ends (shoulders).

A neckline drawn at a support level connecting the troughs between the highs serves as a key trigger point. If price breaks below the neckline, the target taken from the distance between the top of the head and the neckline typically confirms a bearish reversal.

In Bitcoin's case, the pattern has developed over the past few months, with the left shoulder forming in mid-November, the head rising in early December, and the right shoulder forming from late December to early January.

Related: Bitcoin January ‘nothing new will drop in post-half years – analysts

Currently trading around $91,750, Bitcoin risks falling below the neckline support at around $91,000. If this pattern emerges, the proposed bottom target is around $76,750, indicating the height of the pattern minus the neckline.

Additionally, the Relative Strength Index (RSI) near 41 shows bearability but still leaves room for further declines before reaching the oversold threshold of 30.

This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.