According to Bitcoin Rainbow Chart analysis, BTC is undervalued as analysts predict macro and ETF flows will be the main drivers in 2024 and 2025.
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Bitcoin rainbow chart shows accumulation signals for BTC.
Predictive models and analysts predict a massive rise in Bitcoin price in the coming months.
Bitcoin [BTC] gained more than 68% in the first quarter of 2024, but negative factors in the second quarter ate into some of those gains. As BTC fell 7% in the second quarter, with prices hovering between $60,000 and $71,000, it’s critical to use the Bitcoin Rainbow Chart to gauge whether it’s overvalued or undervalued.
On a YTD (year-to-date) basis, BTC has risen over $22,000, a gain of 50.3%. However, headwinds in the second quarter, including interest concerns and tensions in the Middle East, have unnerved investors and partly explain last week’s drop.
Now that Bitcoin is back above $66,000, the big question is: is it too expensive, or is it cheap at its current value?
Bitcoin Rainbow Chart Signals “Accumulate”
According to the Bitcoin Rainbow Chart, Bitcoin’s current price level is within the “accumulation” zone.
The Bitcoin Rainbow Chart visually represents Bitcoin valuation based on historical data. Notably, it is a logarithmic scale and includes ribbons showing buy (blue, green) and sell (orange, yellow) areas.
In the past three halving cycles, BTC was significantly undervalued immediately after the halving. Although the current BTC price level is slightly higher than the scale of the previous cycle, it is still within the “accumulation” zone.
Therefore, according to the Bitcoin Rainbow Chart, Bitcoin is still undervalued and not overheated.
Additionally, the stock-to-flow (S/F) model suggests that Bitcoin’s price has even more upside potential. The model assesses BTC’s future price by dividing its circulating supply by the number of coins mined each year.
The model has been able to predict BTC prices with fair variance in the past. It predicts that BTC will surpass $100,000 in the third quarter of 2024 and reach over $450,000 by the end of 2025.
However, considering new US spot BTC ETF factors and macro pressures, cross-referencing S/F forecasts with nuanced expert analysis can also provide important insights.
Why Analysts Believe BTC Could Reach $200,000 in 18-24 Months
Interestingly, Standard Chartered Bank predicts that Bitcoin will reach $200,000 in the next 18-24 months.
In a recent interview, Geoff Kendrick, head of digital assets research at Standard Chartered Bank, cited the maturity of spot BTC ETFs as a driving factor;
"I expect you'll get $50B to $100B in inflows from the beginning of this year until the U.S. market matures in the ETF market. So far, we have $12B. That could happen in 18-24 months."
Kendrick linked the BTC ETF to gold, noting that when the ETF fund flows expired, the price of gold increased by 4.3 times. According to Kendrick, if the BTC ETF's flow expiration dates follow the path of gold, then,
“That would probably put us in the $150,000 to $200,000 range.”
Similarly, in mid-March, Bernstein analysts revised their mid-2025 BTC price prediction from $90,000 to $150,000, citing “greater than expected” flows into spot BTC ETFs.
CryptoQuant founder Ki Young Ju said the BTC accumulation craze by “new whales” has now doubled down.
“Initial investment in#Bitcoinby new whales is almost double the cumulative total of old whales.”
However, massive whale demand isn’t the only good news for Bitcoin’s future price. The macro overview is consistent as well.
BitMEX founder and Maelstrom CIO Arthur Hayes expects a favorable summer for BTC, citing “sovereign bond market” issues as the reason. In a recent blog post titled “The Left Curve,” the CIO noted;
The CIO accurately predicted last week’s massive sell-off, citing U.S. tax season and the Bitcoin halving.
While tensions in the Middle East also played a role in last week’s drop, Hayes’ forecast suggests that the macro outlook for Bitcoin looks good as we begin the summer.
That said, Bitcoin price prediction models, including the Bitcoin Rainbow Chart and analysts, all suggest that Bitcoin will rise further in the coming months.
If these predictions are confirmed, then the current price of Bitcoin would be extremely cheap.
