Key Components of the Bitcoin Rainbow Chart:
Halving Events: These events (indicated as blue vertical lines) are critical in Bitcoin's price movements. Bitcoin halving, which occurs approximately every four years, reduces the block reward miners receive by half. This supply-side shock typically precedes major bull runs. We can observe four halving events in the chart:
1st Halving: November 28, 2012
2nd Halving: July 9, 2016
3rd Halving: May 11, 2020
4th Halving: April 19, 2024
5th Halving: Projected for around 2028
Historically, after each halving, $BTC experiences a massive price surge due to the reduction in supply growth combined with increasing demand.
Price Movements and Logarithmic Regression: The rainbow chart shows Bitcoin's price trajectory in a long-term logarithmic scale, with different bands representing market sentiment. The chart is divided into color-coded segments that reflect different stages of market sentiment and price expectations:
Blue (Fire Sale): Undervalued zone, an optimal buying opportunity.
Green to Yellow (Accumulate to HODL): Suggests Bitcoin is still relatively cheap, and accumulating is a good strategy.
Orange to Red (FOMO to Maximum Bubble Territory): Indicates an overbought market with high levels of speculation, where the price may enter a bubble.
The chart also serves as a guide to identify periods of extreme undervaluation and overvaluation.
Market Cycles: Historically, after each halving, Bitcoin enters a bullish phase, pushing the price up through the rainbow bands from the lower (blue) regions into the higher (red) regions, eventually forming a price peak. Following these peaks, Bitcoin typically retraces and enters a bear market, finding support in the lower bands before the next halving-induced bull run.
Predicting Bitcoinâs Future Movements (2024-2028)
Short-Term (Pre-2024 Halving):
As of the current state in the chart (which shows $BTC around the "HODL!" and "Still Cheap" zones), we are in the later stage of a bear market or the early phase of accumulation.
Price Target Pre-Halving 2024: Based on the trend and prior cycles, Bitcoin's price is expected to remain relatively stable or slightly upward, within the range of $40,000 to $60,000, possibly staying in the "Accumulate" zone before the halving event occurs.
ADX & Moving Averages (as from your earlier chart): If we combine moving averages and ADX analysis, the trend strength may still be weak until ADX confirms a stronger bullish trend closer to the halving event.
Medium-Term (Post-2024 Halving):
Post-Halving Rally: Historically, Bitcoin experiences a strong rally 6-12 months after each halving event. If history repeats, we should expect Bitcoin to rise dramatically from the mid-2024 period onwards.
Likely, the price could surge past the $100,000 mark, potentially entering the "FOMO Intensifies" and "Maximum Bubble Territory" bands.
Price Target Post-Halving 2024: Bitcoin could easily surpass $100,000 and could go as high as $150,000 to $200,000 during this bullish cycle, likely peaking in 2025 or early 2026.
Long-Term (2026-2028):
After reaching a speculative peak (possibly in late 2025 to 2026), the price will likely begin to cool down, similar to past cycles.
2026-2028 Bear Market: $BTC might retrace to the lower bands (possibly the yellow or green areas, "HODL!" or "Still Cheap" zones) after reaching its peak in the post-halving bull run. Historically, Bitcoin could lose 70% or more of its value from the speculative peak before consolidating and accumulating in preparation for the next halving.
Price could drop to $70,000 - $100,000 during this period of retracement.
5th Halving in 2028: This could trigger the next upward cycle.
Macroeconomic Factors & Dominance in All Coin Season
Bitcoin Dominance & Altcoin Season:
Bitcoin dominance tends to rise before and during major Bitcoin bull runs. During this period, capital flows heavily into Bitcoin, diminishing the share of altcoins.
Post-Bitcoin Bull Run (Altcoin Season): Once Bitcoin reaches its peak (historically around 6-12 months post-halving), money often flows into altcoins as investors seek higher returns from smaller-cap assets. Bitcoin dominance may drop sharply during this phase, marking the beginning of an altcoin season.
Timing Altcoin Season: A significant drop in Bitcoin dominance below 50%, coupled with a rising altcoin market cap, signals the start of a strong altcoin season. This may happen in late 2025 or early 2026, after Bitcoin's peak.
Macroeconomic Influence:
Monetary Policy: Global macro factors, like interest rates and inflation, can influence Bitcoin cycles. Lower interest rates and inflationary pressures often drive more investors toward Bitcoin as a hedge.
Institutional Investment: Increasing institutional adoption of Bitcoin ETFs or large-scale investment could drive prices much higher post-2024 halving, bringing more liquidity into the market and pushing Bitcoin into the speculative bands ("Maximum Bubble Territory").
Summary & Insights:
Current Phase: Bitcoin is in an accumulation zone, relatively cheap compared to historical highs. Now is an optimal time to accumulate.
Post-Halving 2024 Rally: Expect strong upward price movement from mid-2024, likely hitting $100,000+.
Peak Around 2025: Bitcoin could peak at $150,000 to $200,000 by late 2025.
Long-Term Outlook: Bear market and consolidation post-2025 peak, with price retracing to $70,000-$100,000 before the 2028 halving triggers the next cycle.
Altcoin Season: Watch for a drop in Bitcoin dominance in 2025-2026, signalling a potential altcoin season.
By considering these factorsâhalving's, dominance, altcoin season index, macroeconomic trends, and historical cyclesâwe can gain a robust understanding of the upcoming market trends for Bitcoin and the overall crypto market.
