Bitcoin rainbow chart suggests it's time to buy Bitcoin. Should you jump into this market?
The Bitcoin Rainbow chart showed a buy signal for the asset.
QCP Capital has shared a similar long-term bullish outlook for Bitcoin.
Bitcoin (BTC) has been stuck between $60,000 and $70,000 for over six months, with occasional dips below $60,000.
Although the sideways structure may discourage some players, the Bitcoin Rainbow chart has indicated a strong “buy” opportunity for the asset amid the Fed pivot.
The chart is an evaluation model that uses rainbow colors and past historical patterns to measure whether an asset is overpriced or underpriced.
The current price action was within the second color range, indicating a great buying opportunity.
Is there more room for BTC to grow?
Bitcoin’s relatively low price has been boosted by one of the leading indicators of a market cycle – the MVRV Z-score (market value to realized value). In previous cycles, Bitcoin’s value peaked when the scale reached 7 to 10.
In short, the current reading near 1 suggests that there is more room for Bitcoin prices to rise. If so, then the current Bitcoin prices could be considered a huge deal.
Speculators’ positions have further reflected these bullish expectations, especially in the futures market. According to Edwards Charles, founder of cryptocurrency venture capital firm Capriole Investments, the markets have been in a permanent bull run for Bitcoin.
For context, a permanent uptrend (highlighted in green) indicates high market leverage and open perpetual contracts.
This means that more speculators were taking more risks by opening perpetual contracts using leverage. This indicates expectations of higher prices in the future and has historically recorded the lowest levels for Bitcoin.
However, the use of leverage in the market carries with it enormous liquidation risks that may lead to volatile downside risks.
However, Bitcoin analyst Willy Woo claimed that he is “cautiously optimistic” as the asset has not decisively turned bullish. He said,
However, cryptocurrency trading firm QCP Capital maintained a bullish long-term outlook for Bitcoin amid the Fed’s shift. It stated,
