- The Bitcoin Rainbow chart entered the ‘buy zone’ after the 2020 and 2024 halvings.
- Market indicators pointed to a price decline in the coming days.
Investor confidence in Bitcoin [BTC] has shrunk somewhat as the king of crypto fails to rise above $69,000. However, the Bitcoin Rainbow Chart showed that BTC actually mimicked the 2020 trend after the halving.
Does this mean BTC is all set to spark a rally?
The right time to buy Bitcoin?
Bitcoin price volatility has decreased in recent days. This has caused problems for BTC as it struggled to break above $69,000.
However, investors should not get discouraged as BTC mimicked its behavior after the halving in 2020.
AMBCrypto’s analysis showed that after months of the third halving, the Bitcoin Rainbow chart revealed the coin entering the “BUY” zone. After staying in that zone for a few months, the price of BTC skyrocketed.
A similar trend was seen in BTC’s 2024 Rainbow chart, as it indicated the coin was in the buy zone.
If that is to be taken into consideration, this may be the last chance for investors to buy BTC at a lower price before it goes up and enters the accumulation and HODL zones.
Source: BLOCKCHAIN CENTER
AMBCrypto then analyzed BTC’s on-chain metrics to see if investors have considered buying BTC as suggested by the Rainbow chart.
We found that currency outflows fell last week, after peaking on May 24. The supply on the exchanges increased, which meant that investors preferred to sell.
Source: Santiment
Our look at CryptoQuant’s facts revealed that the net deposit of BTC on the exchanges was high compared to the average of the past seven days, further indicating high selling pressure.
Apart from this, Coinbase Premium was in the red, meaning selling sentiment was dominant among US investors.
Bitcoin’s problems are far from over
AMBCrypto then checked whether the increase in selling pressure could lead to a price correction.
We found that investors were not following the Bitcoin Rainbow chart because the aSORP was red, indicating that more investors are selling at a profit. In the middle of a bull market, this could indicate a market top.
At the time of writing: BTCs fear and greed index had a value of 74, meaning the market was in a ‘greed’ phase. When the metric reaches that level, it indicates a price correction.
Source: CryptoQuant
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Like the metrics, most technical indicators also looked bearish. For example, the MACD showed the possibility of a bearish crossover.
The Relative Strength Index (RSI) registered a decline, indicating a soon decline in prices. Nevertheless, the Chaikin Money Flow (CMF) remained bullish as it headed north.
Source: TradingView