Bitcoin Rainbow Chart says BTC is ‘still cheap’ – Should you buy more or not?

• Bitcoin’s Rainbow Chart revealed a purchase sign after being in HODL territory since December
• The RSI and dominance tendencies didn’t fairly match with the earlier cycle tops

Bitcoin [BTC] has suffered losses lately, regardless of a gradual inflow of seemingly constructive information. One such instance is information of the Spanish banking large BBVA providing BTC and Ethereum [ETH] buying and selling to its purchasers.

Supply: Blockchain Center

The Bitcoin Rainbow Chart is a logarithmic progress curve overlaid with rainbow colours to assist visualize long-term Bitcoin tendencies. On the time of writing, it confirmed that the worth was “nonetheless low-cost.”

In earlier two cycles, the chart has at the very least touched the “Critically promote!” territory. This time, it hasn’t even examined the “Is that this a bubble?” territory. After all, we are able to’t base our funding selections on simply the Bitcoin Rainbow Chart. Nevertheless, there are a pair extra dissimilarities with earlier cycles and the prevailing value motion – Indicators that we’re not near a prime but.

Some explanation why you shouldn’t promote your BTC but

Supply: BTC/USD on TradingView

Assuming you aren’t holding Bitcoin for the subsequent decade, it might be good to experience the uptrend, promote roughly across the prime, and accumulate all through the bear market. A lot simpler mentioned than finished, although.

In 2017, the weekly BTC RSI was above 70 for a number of weeks as the worth set a sequence of recent, unbelievable highs. In 2021, the worth and the RSI made a bearish divergence. Subsequently, the worth fell by almost 50%, earlier than recovering after which getting into the bear market.

In latest months, the RSI was above 70 for a complete of six weeks, however rapidly fell decrease. It has since fallen beneath impartial 50, resembling the 50% correction BTC noticed in the summertime of 2021. The same sized correction might take BTC to $54k.

Supply: BTC.D on TradingView

One other dissimilarity with the earlier two cycle tops was the habits of Bitcoin Dominance. The BTC.D has been close to multi-month lows through the previous two cycle tops. Proper now, it’s on an uptrend, making new highs not seen since March 2021.

Due to this fact, traders have to be cautious of additional, steeper value drops. And but, long-term traders can draw solace from the truth that the dominance and RSI tendencies didn’t match the earlier cycle tops.