Bitcoin has fallen to its lowest level since August 20th, and fear once again gripped the entire crypto market. Trader and analyst Tim Warren is not worried. He stated that the current pullback is very similar to what happened at the beginning of 2023, when Bitcoin dropped near the 200-day moving average before soon thereafter embarking on a new bull market.

Bitcoin is near key moving averages

The current trading price of Bitcoin is close to $74,000, which is exactly around its 200-day moving average. On the day of the latest inflation report, the price first fell after the relatively high figures were released, then managed to recover all the losses, only to fall back down again, eventually settling on this moving average.

Warren said that he had anticipated this long ago. At the end of September, he told his audience that selling signals were accumulating, and it was very likely that Bitcoin would pull back to near the 200-day moving average. At that time, many traders were still calling for a price break above $90,000.

Why might it already appear at the bottom?

Warren believes that the bottom of the bear market for Bitcoin was reached at $57,700 this summer. He pointed out that there have been several signs of a trend reversal:

• Bitcoin reaches a higher high for the first time since the start of the bear market
• The price has broken through the trend line that has been suppressing the downward trend during the decline period.
• Before this recent round of adjustments, it had already re-crossed above the 200-day moving average.

Extreme fear, but the price is even higher.

The Fear of Crypto and Greed Index has returned to the “extreme fear” range for the first time since August. Warren indicates that, compared to the last time market sentiment was similarly low, the price of Bitcoin is still about 17% higher. In his view, this suggests that what is happening is merely “a very healthy and sharp correction,” rather than the beginning of a new round of collapse.

"Composite Human" Theory

Warren mentioned the views of Richard Wyckoff, a market trader from about a century ago, to explain a recent series of negative news. Wyckoff describes large market participants as a role he calls "composite beings." According to this view, these big players would push bullish news at the top of the market and create frightening news at the bottom of the market.

In the past few weeks, there have been such headlines as Binance being attacked by hackers, the Democratic Party gaining control of Congress, and a somewhat overheated inflation report. Warren In September, he reminded his community to expect "headlines that will make you feel scared" during the correction period.

Will Bitcoin have a Christmas market trend?

When asked about a rebound at the end of the year, Warren stated that what he mainly expects is volatility. He had previously predicted that Bitcoin would reach a record high before January 20th, but now he says that "that is very unlikely to happen."

He stated that large institutions are still waiting and watching, as there are two matters that have not yet become clear:

• Iranian War: Due to the uncertainty caused by the conflict, oil prices have remained high.
• Fed: Following the relatively strong inflation report, markets currently estimate that the probability of a rate hike in December is around 82% to 83%.

What could ignite the next round of gains?

Warren believes that the end of the Iran war could become a turning point. He pointed out that in the latest inflation data, the price increases excluding energy are close to or below the Federal Reserve's target of 2%. Energy costs have risen by about 10%, and transportation costs have increased by about 7% to 8%.

Once the war ends, Warren expects oil prices to fall significantly. This will cause inflation to decline faster than many people anticipate, prompting the Federal Reserve to stop raising interest rates and may even lead to renewed discussions about lowering interest rates, which would be beneficial for Bitcoin.

CoinPedia Explanation

Since 2017, CoinPedia has been providing accurate and timely updates on cryptocurrencies and blockchain. All content is written by its team of expert analysts and journalists and follows strict editorial guidelines based on E-E-A-T (experience, professionalism, authority, credibility). Each article undergoes fact-checking against reliable sources to ensure accuracy, transparency, and reliability. Its review policy guarantees a fair assessment when recommending exchanges, platforms, or tools. CoinPedia is committed to keeping all content related to crypto and blockchain up-to-date in a timely manner, covering everything from startups to industry giants.

Investment Disclaimer

All views and opinions expressed in this text represent solely the author's perspective on the current market conditions. Before making any investment decisions, please conduct your own research. Neither the author nor the publisher assumes any responsibility for your financial choices.

Sponsorship and Advertising

Sponsored content and affiliate links may appear on the website. Advertisements will be clearly marked, and the editorial content is completely independent of advertising partners.