Bitcoin's price action is growing increasingly erratic

Yesterday, Bitcoin endured a volatile session with an early plunge to $25 000, followed by a rebound to a new high of $23 815. Interestingly, the price action occurred after the U.S. stock market closed and was characteristic of profit-taking, lasting merely a few minutes. This ties to a pattern of wild moves to the upside after the market close or during the weekends when the futures market for Bitcoin is closed, leading to low volumes (and easier manipulation of the price). That raises additional questions about the health of the current rally and makes us stay very cautious and look for signs of weakness, which could suggest a short-term trend reversal.

As for our outlook beyond the short-term, we remain bearish and maintain our price targets at $15 000 and $13 000. That is because we continue to foresee institutional problems in the cryptocurrency market, more economic tightening on the level of central banks, and ongoing earnings recession (all weighing on stock and cryptocurrency markets). Furthermore, the current rally matches our description of a bearish case we outlined in its early start (we wanted to see the rising price and declining volume throughout the rally).

Illustration 1.01
Illustration 1.01 portrays the 1-minute chart of BTCUSD and the run-up in the price after the U.S. stock market closed yesterday.

Illustration 1.02
The picture above shows the 1-minute chart of BTCUSD dating back to the 20th (Friday) and 21st of January 2023. The yellow arrow indicates the U.S. stock market close going into the weekend. Interestingly, during the weekend, price action was livid.

Illustration 1.03
The image above shows the 1-minute chart of BTCUSD dating back to the 13th (Friday) and 14th of January 2023. Once again, the price action was very livid during the weekend.

Technical analysis
Daily time frame = Bullish
Weekly time frame = Slightly bullish

Illustration 1.04
Illustration 1.04 displays the daily chart of BTCUSD. The red arrow indicates a declining volume accompanying the price increase. Low volume near high price tags continues to hint at fewer buyers willing to buy Bitcoin after such a price rise. The same decline can also be observed across most other exchanges (besides Bitstamp) and in the futures market.

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.