Bitcoin Analyst Flags 3-Year Bearish Pattern as BTC Price Dips 5% Amid Dovish NFP Figures

Bitcoin Price Analysis:

Bitcoin price plunged as low as $53,334 on Sept 6 despite dovish figures from the latest US Non-Farm payrolls. On-chain data analysis shows how BTC price steep 28% decline from its yearly timeframe peak of has coincided with a major decline in network activity.

Bitcoin Price Plunges below $54k Despite Dovish NFP Figures

After recording 9.35% losses in the last week of August 2024, Bitcoin extended the negative run into September. Since the start of the month, BTC price has lost a further 9.64%, as it traded for as low as $53,334 at the time of writing on Sept 6.

Bitcoin’s negative price performance in the first week of September comes as a surprise to many bull traders who had bet on dovish figures from US Labor Market reports would trigger an instance price recovery phase.

However, dovish figures in the US Bureau of Labor Statistics’ latest Non-Farm Payrolls report published on Sept 6, did little to support the bullish expectations.

According to TradingEconomics data, the US economy added 142,000 jobs in August 2024, which was more than the 89,000 added in July but below the forecast of 160,000. The unemployment rate stood at 4.2%, as expected, down from 4.3%. Employment declined in manufacturing (-24,000), largely due to a 25,000 reduction in durable goods industries.

Despite these dovish figures, analysts at ForexLive hinted a 43% chance of a 50 basis point rate cut, with 110 basis points of easing priced in for the rest of the year ahead of the next FOMC meeting on September 17.

Evidently, the rate cut chances hanging in the balance at 43% probability, was not enough to convince bull traders to start opening large LONG positions on BTC. Th

This partly explains Bitcoin’s muted price reaction after the report was released on Sept 6.

Bitcoin Network Activity Down to 3-Year Low

Asides from the lack of clear-cut signals for dovish Fed rate decision in September,  Bitcoin’s network activity trends observed over the last 5-months has also raised major bearish concerns.

The CryptoQuant chart below tracks the number of unique wallet addresses that conduct valid transactions on the Bitcoin network on any given day. The DAA metric helps identify changes in network demand and investor participation rate and how they could impact BTC price movements.

The chart above shows that only 818,273 unique addresses conducted transactions on the Bitcoin network over the last 7-days. But zooming out it shows that this is the lowest network usage Bitcoin has recorded since 2021.

For context, Bitcoin network demand reflects a staggering 39% decline from the 1.13 million active addresses recorded on March 13, 2024 when BTC price hit an all time-high.

Typically, a persistent decline in daily active addresses is taken as a tell-tale bearish signal of investor disinterest. The red arrows in the chart further depict how BTC prices has often fallen significantly during periods similar sharp declines in network activity.

Evidently, the 39% Bitcoin network demand downtrend over the last 6 months has been pivotal in BTC retracing 28% from its  all-time high of $72,300 on March 13 to hit the $53,334 level at the time of publication on Sept 5.

However Kyle Doops, a prominent analyst and host of the Crypto Banter show, painted an optimistic outlook of this narrative.

In a recent post on the X (formerly Twitter) he stated that:

The sharp reduction in active Bitcoin addresses in 2024 indicates a pause in market activity, differing from past bear markets.

Despite price stagnation, investors are cautiously observing, influenced by external factors such as ETFs and the U.S. election. A rebound in active addresses could signal a future price rise.

– Kyle Doops ( Technical Analyst & CryptoBanter show host. )

 

According to Kyle the decline in BTC active addresses implies a decrease in transaction volume, could mean investors are choosing to wait and see how Bitcoin will react, given the current uncertain economic landscape.

Bitcoin Price Forecast: $62k Breakout Could Tigger New Bull Run

Bitcoin price fell 5% within the daily timeframe on Sept 6, slipping deeper into bearish territories. The current Bollinger band and RSI technical indicators’ set-up suggest Bitcoin price could be at risk of a rapid crash towards $50,000 in the days ahead.

Bollinger Bands, a popular technical indicator, are used to gauge price volatility and potential breakout points.

As of September 6, Bitcoin’s price of $53,108 has fallen below the lower Bollinger Band at $54,151. This breach of support typically signals further downside ahead, especially if other market conditions remain bearish.

In addition, the Relative Strength Index (RSI) is has dropped to 32.63, nearing the oversold threshold of 30.But conversely, bull traders may look to capitalize on the gloomy market momentum to buy the dip.

Strategic investors will pay close attention to market indicators and policy statements from US Fed chiefs in coming days.

More dovish leaning indicators could trigger a positive market reactions, which could see BTC and other risk assets could begin to attract buyers as the next Fed rate decision slated for Sept 17 draws nearer.

In this scenario, Bitcoin price must clear the $64,887 resistance zone as highlighted by the Upper Bollinger band indicator.