Bitcoin Rainbow Chart Says BTC Will Reach $250K
The Bitcoin Rainbow Chart showed that investors should “BUY!” more BTC. Sentiment has been bearish over the past two weeks and prices may continue to fall.
Bitcoin [BTC] is trading near the $60 support level again. Nearly two months ago, the same $60k support zone was tested as support after a sharp drop to $56k.
At that time, sentiment was fearful and investors were cautious. A similar sentiment prevailed now.
While the short term price action was bearish, the longer term price action was strongly bullish. Over the past six months, bitcoin has risen nearly 55% from the late January lows of $38.5k. It has made a higher low at $56,500, which marks a critical support level that buyers will have to defend in the coming weeks.
The Bitcoin Rainbow Chart showed that it is still a good time to buy bitcoin. This chart shows the price movement of bitcoin on a logarithmic scale and can be useful for investors to predict possible cycle peaks.
Measuring the Top of the Cycle from Bitcoin’s Rainbow Chart
The multi-colored chart highlights different zones from “Bitcoin is dead” to “Peak Bubble” territory. At the time of publication, BTC was in a fairly aggressive “BUY!” zone. At the time of publication, the chart was confident that there was still a long way to go before the price discovery of this cycle is extended.
One media outlet noted that the highs of the last two cycles occurred between 17 and 18 months after the halfway point, that in the current cycle a peak could be reached in September or October 2025.
In 2021, BTC could not rise above “Is this a bubble?” territory. The media outlet opted to be more conservative this time and assumed that Bitcoin might not cross “HODL” territory this time. Even this conservative bet puts Bitcoin’s value at $260,000, with an estimate of $373,000 should Bitcoin fall into “Is this a bubble?” territory.
The Buyer’s Weakness Was Highlighted
The Coinbase Premium Index was negative last month. It noted that the price on the Coinbase market was just under 0.1% lower than the Binance USDT bitcoin pair.
This means that US investors’ interest in bitcoin has decreased significantly over the past six weeks. In March and April 2024, the index was mostly positive, but sentiment has changed significantly since then.
Another sign of bearish sentiment was the sharp drop in open interest. On June 6, OI stood at $19.1 billion. At press time, with prices down 14.6%, OI stood at $16.5 billion.
This suggests that futures market participants preferred to stay on the sidelines and were unwilling to buy BTC due to the steady decline in recent weeks.
This may be a good thing in the long run, as it removes over-leveraged bulls and guides price movements to a more stable spot-driven path.
Farside Investors’ data on Bitcoin ETF inflows was negative last week. This was quite different from the first week of June and once again reflected a change in sentiment.
The current price decline could go further south. The Mt. Gox news and refunds to customers whose assets were stolen a decade ago mean there are a number of reasons why sentiment in the cryptocurrency market is in a tailspin.
By Leonardo Perez