Bitcoin rainbow chart indicated that the asset was grossly undervalued at current price with a potential to climb higher.
Although the sideways structure might discourage some players, the Bitcoin Rainbow Chart signaled a firm ‘buy’ opportunity for the asset amid the Fed pivot.The chart is a valuation model that leverages rainbow colors and past historical patterns to gauge whether the asset is overpriced or underpriced.The relatively discounted BTC price was further reinforced by one of the leading market cycle top indicators—the MVRV Z score . In past cycles, BTC topped out when the metric hit 7 to 10.
In short, the current reading near 1 suggested more room for BTC prices to rally. If so, current BTC prices can be deemed a massive bargain.Speculators’ positioning further mirrored this bullish outlook, especially in the Futures market. According to Edwards Charles, founder of crypto VC firm Capriole Investments, the markets were in a BTCIt meant more speculators were taking extra risks to open perpetual contracts using leverage.
However, using market leverage carries massive liquidation risk that could drive volatile downside risk. That said, Bitcoin analyst Willy Woo claimed he was “cautiously optimistic” because the asset hasn’t decisively flipped to bullish. He “Current demand and supply is neutral bearish, but signs of moving into a bullish structure if we get some liquidations. Cautiously optimistic”“The start of a rate-cutting cycle aimed at normalizing interest rates supports hard assets as stores of value. While drawdowns and high volatility are expected, don’t let that distract you from the path to higher BTC prices.”Benjamin is a Telecommunication Engineering graduate who is passionate about crypto-markets and unraveling market trends.
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