- Bitcoin price dropped below the key support level at $70,000.
- BTC had formed a bearish flag pattern, a common continuation sign.
- US bond yields and mortgage rates have soared recently.
Bitcoin price slipped below the important support level at $70,000 overnight as traders waited for the upcoming options expiry and as the Iran war continued. BTC was trading at $68,800 on Friday morning, and could be at risk of a deep dive after forming a highly bearish chart pattern.
Bitcoin Price Forms a Bearish Flag Pattern
The three-day chart shows that the BTC price has slumped in the past few months, falling from a record high of $126,200 to $68,800 today.
A closer look shows that it is in the process of forming a bearish flag pattern, which is made up of a vertical line and an ascending channel. It is now in the latter part of this pattern.
Most notably, Bitcoin did the same pattern a few months ago, with the channel forming between November 21 and January 13 this year.
Bitcoin has also formed a death cross pattern, with the 50-day and 200-day Exponential Moving Averages (EMA) crossing each other. A death cross is one of the riskiest patterns in technical analysis.
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The coin has plunged below the Supertrend indicator and the key support level at $74,725, its lowest level in April last year.
Therefore, the coin will likely stage a strong crash in the coming days or weeks, with the next key target being the year-to-date low of $60,390. A drop below that level will point to more downside, potentially to the psychological level at $50,000.
Bitcoin Faces Major Risks Ahead of Options Expiry
BTC price may be at risk of a strong bearish breakdown as key risks jump. One of these risks is the situation in the bond market, where US bond yields are rising.
The ten-year yield jumped to 4.41%, while the 2-year rose to near 4%. Bond yields have jumped recently as energy prices have jumped amid the ongoing Iran war. US mortgage rates have also rebounded this month.
Analysts at OECD, a club of rich countries, predicted that US inflation will jump to 4.2% this year, making it hard for the bank to cut interest rates this year.
Worse, the soaring inflation is happening as the labor market worsens, with the economy shedding over 92k jobs. Bitcoin and other altcoins underperform the market when the Fed is hiking rates.
Bitcoin price will also react to the upcoming options expiry, which will happen later on Friday. Data shows that options worth between $14 billion and $15 billion will expire later today. Bitcoin often experiences substantial volatility ahead and after these expiries.
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