- Bitcoin’s rainbow chart was combined with technical analysis of the weekly BTC price chart.
- Bitcoin could reach the peak of the cycle in the first half of 2025.
Bitcoin [BTC] since September 12, prices have risen higher. The uptrend had many pullbacks and stops, but the trend was clearly visible on the higher time frame price charts.
Despite the many rumbles and failures within the crypto industry in 2022, the king stood strong.
The end of 2023 is near, and the next one Bitcoin halving is estimated to take place in April 2024. Looking into the future is impossible, but that doesn’t mean we can’t plan for it. So what will 2024 and 2025 bring to the BTC markets?
What new highlights could we see? A strong contender for crystal ball status is the Bitcoin rainbow chart.
According to the rainbow chart, it is a good time to buy BTC
Source: BlockchainCenter.net
The Bitcoin rainbow chart is a nice looking, colorful chart that shows where BTC is. Each color band has a meaning, a message for investors, although it is of course not financial advice. At the time of writing, BTC is trading within the “Accumulate” zone.
The halving events are also marked and the interpretation is quite simple. Buy Bitcoin when it is below the yellow zone and sell when it reaches the orange or red zones.
This is especially useful for long-term investors who don’t have the time or inclination to track BTC prices daily or monitor multiple on-chain metrics.
In the past, the bull run occurred a year or more after the halving. Assuming the same is true for the next halving, we will likely reach the top of this cycle in 2025. But when, and what would those prices be?
Technical analysis can help answer the question of ‘where’
The Fibonacci retracement and extension levels are a well-known and widely used technical analysis tool.
They perform remarkably well over different time frames but rely on the user’s judgment in determining the start and end points.
In our case we will use the top and bottom of a rally so that subjectivity can be excluded. There was a strong rally from $3135 to $13.8ka year before Bitcoin’s halving in 2020. This move was used to chart the Fibonacci extension levels (white).
Source: BTC/USD on TradingView
The rally reached the 500% extension level 868 days after the initial move, or about 2.5 years later. This is information that could be valuable for a subsequent assessment.
Just like last time, BTC has recovered strongly in the year leading up to the halving.
We are still not at the local top. Bitcoin is in a strong bullish trend and the market structure on the one-day chart remained in favor of the buyers.
Still, we can similarly plot the Fibonacci extension levels to figure out where the 500% extension level would be.
Source: BTC/USD on TradingView
Assuming the $45k price reached on December 5 is the top of this run, the 500% expansion level comes to $192.7k.
Given the current bullish outlook for BTC on the one-day chart, $45k might not be the local top.
If we go back to the rainbow chart, we see that BTC reached the lower red band in the bubble zone in the previous cycle. Therefore, we can assume that $192,000 in 2025 would be approximately in the same range.
On the rainbow map this is expected to be February 2025.
So there you have it: a neat Bitcoin price prediction for the next cycle. For readers who want to assess some on-chain metrics, the NUPL chart may be of interest.
Additional on-chain metrics to keep an eye on
The Bitcoin Net Unrealized Profit/Loss metric measures the total profit or loss of BTC investors. Values above ‘0’ indicate that holders are making a profit, and the upward trend in recent months shows that more and more investors are making a profit.
Source: CryptoQuant
In the previous cycle, this statistic was 0.748 on February 21. Interestingly, during the 2019 rally to $13.8k, the NUPL reached 0.61.
Read Bitcoin’s [BTC] Price forecast 2023-24
The metric stood at 0.49 on December 27, but a reading of 0.5 or higher would mean the current move is likely nearing its end.
Once again, these inferences are made on the assumption that history would repeat itself. Sometimes it just rhymes, instead of repeating. Therefore, investors and traders must be vigilant and prepared to incorporate new information into their plans.