- The Rainbow Chart showed that the bottom for BTC is closer than the top
- The declining NUPL noted reduced selling pressure from profit takers
Thirteen months ago, Bitcoin [BTC] traded at $25.7k. Last September the market was desperate and the halving would take at least another seven months. This sentiment changed in October, amid rumors of a possible SEC approval of a spot ETF. Inflation also seemed to have reached its peak.
These factors contributed to Bitcoin’s attractiveness to potential buyers, and prices soared, reaching an all-time high of $73.7k in March 2024. Can this October also initiate a rally that breaks the annual highs?
Bitcoin Rainbow Chart encourages investors
Bitcoin’s Rainbow Chart is a fun way to look at Bitcoin’s long-term price trends. It uses a logarithmic scale to chart the price of Bitcoin, and color codes to show investors whether to buy, sell or HODL.
It is not an exact tool, but it does a surprisingly good job in terms of predicting and timing the top and bottom of the cycle, especially the latter. Although it has dipped towards ‘Bitcoin is dead’ territory in recent months, it hasn’t quite reached the ideal buying zone yet.
However, BTC is still in a good buy zone, with the Bitcoin Rainbow Chart describing it as “a fire sell.” Comparing the performance of this cycle with the previous one, Bitcoin could start a strong rally in the second half of October.
This rally could be the bull run that follows a halving.
The downward trend since April has impacted investor profitability
At the time of writing, the net unrealized gain/loss measure stood at 0.47 – a sign that market capitalization was greater than realized capitalization. Therefore, a large portion of holders can still make a profit even if the price shows a southerly trend in the past six months.
Read Bitcoin’s [BTC] Price forecast 2024-25
The NUPL also fell along with the price, showing that the intention to sell of holders at a profit is likely to decline. This means that there is room for price increases in the coming months. A NUPL value above 0.7 usually marks the end of the cycle.