From Coinpedia · By Anjali Belgaumkar
Bitcoin has fallen to its lowest level since August 20, and fear is back across the crypto market. Trader and analyst Tim Warren is not worried. He says the current pullback closely resembles early 2023, when Bitcoin dipped back to its 200-day moving average shortly before a new bull market began.
Advertisement Bitcoin Sits On A Key Average
Bitcoin is trading near $74,000, right on its 200-day moving average. On the day of the latest inflation report, the price dropped on the hot reading, recovered all of its losses, and then fell again to land on that line.
Warren had expected this. In late September, he told his audience that sell signals were starting to pile up and that a correction back toward the 200-day average was likely. At the time, many traders were calling for a move above $90,000.
Why The Bottom May Already Be In
Warren believes Bitcoin’s bear market bottomed in the summer at $57,700. He pointed to several signs that the trend has turned:
Bitcoin made its first higher high since the bear market began
It broke above the trendline that had capped prices during the downturn
It climbed back above the 200-day moving average before the latest pullback
Extreme Fear, But A Higher Price
The Crypto Fear and Greed Index has dropped back into extreme fear for the first time since August. According to Warren, Bitcoin is still about 17% higher than it was the last time sentiment was this low. To him, that points to “a screaming healthy correction” rather than the start of a new collapse.
The “Composite Man” Theory
Warren pointed to the ideas of Richard Wyckoff, a market trader from about a century ago, to explain the recent run of bad news. Wyckoff described big market players as one figure he called the “Composite Man.” In this view, large players push bullish headlines near market tops and frightening ones near bottoms.
The past few weeks have brought exactly that kind of news: the Binance hack, Democrats winning control of Congress and a hot inflation report. Warren had warned his community in September to expect “headlines that terrify you” during the correction.
Will Bitcoin Get A Santa Rally?
Asked about a year-end rally, Warren said he mainly expects volatility. He had earlier predicted a new all-time high by January 20, but now says that is “probably not going to happen.”
He said big institutions are holding back until two issues are settled:
The Iran war: Oil prices have stayed high because of uncertainty over the conflict
The Fed: After the hot inflation report, markets are pricing in about an 82% to 83% chance of a rate hike in December