Bitcoin has slipped beneath its 200-Day Moving Average, and fear has returned after the rally from the lows. The price action looks uncomfortable, but several readings are starting to resemble the pullback that followed Bitcoin's initial recovery in 2023. Is this the recovery breaking down or another opportunity to accumulate cheap before the next move higher?
What stands out:
- Bitcoin is retesting its 200-Day Moving Average after reclaiming it during the recovery.
- The Fear and Greed Index has fallen to 28, compared with 50 last week.
- MVRV Quantile Bands place Bitcoin at the 22nd percentile, back in value territory.
A Familiar Retest
Bitcoin's return to the 200-Day Moving Average is an important test of the recovery. In 2023, price rallied from the bear market lows, reclaimed this average and then returned to test it before the larger move higher. We're now seeing a similar sequence.
There are differences. The earlier recovery initially met resistance at the 200-Week Moving Average, while this time the rejection came at the 100-Week Moving Average. I still think the current retest is a reasonable area to look for a bounce, especially given how aggressively price has fallen.
Fear Returns
The Fear and Greed Index is now at 28, down from 50 last week and 57 last month. That's a quick reversal in confidence, putting sentiment back in fear territory and close to extreme fear, but I don't think this is a time to panic sell. The pullback has already removed a lot of the enthusiasm that accompanied the rally.
Back To Value
The MVRV Quantile Bands put Bitcoin at the 22nd percentile. That places the current valuation among roughly the cheapest fifth of historical readings on this measure, consistent with the chart's observation that Bitcoin has been this undervalued on only around one in five days.
The comparable 2023 pullback reached the 8th percentile, so there is room for further downside. Even so, we're already back in a region associated with much more attractive accumulation opportunities. For me, that creates an asymmetric opportunity even if the rest of Q4 remains difficult.
Looking For A Bounce
I'm looking for a rebound around this support area. The similarities with 2023, fearful sentiment and lower valuations give me reasons to see opportunity in the pullback. We may have more difficult price action ahead, but I think the data makes a stronger case for considering accumulation than for panic selling.
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Research Director
