The Bitcoin Rainbow Chart, a widely recognized indicator among crypto traders, is currently signaling a promising buy opportunity for Bitcoin (BTC). According to recent analysis, this leading cryptocurrency appears to be heading towards a significant upward movement. However, analysts highlight a potential hurdle: weak market demand may constrain this bullish momentum.
Bitcoin recently experienced a new all-time high (ATH) on May 22, after which it has spent nearly a month fluctuating between the $100,000 and $110,000 range without a distinct directional trend. The latest signals from the Rainbow Chart indicate that BTC is trading in the light green zone, which traditionally represents a buy signal, suggesting potential growth in the near future.
For those unfamiliar, the Bitcoin Rainbow Chart is an effective long-term valuation tool that applies a logarithmic growth curve. It deploys different color bands to denote Bitcoin’s pricing visibility against historical trends. This vital indicator assists investors in determining periods of overvaluation or undervaluation. While the buy signal is encouraging, the general demand for BTC remains tepid.
Cryptocurrency analyst Darkfost, in a recent post, shed light on market demand metrics. He reported that sluggish demand conditions are limiting Bitcoin’s ability to break out from its current thresholds. A chart comparison between new BTC supply and the amount of coins held inactive for over a year reveals a trend indicating declining apparent demand, even as BTC holds steady above the crucial $100,000 level.
Nevertheless, it’s not entirely bleak. Positive indicators have surfaced, as crypto trader Merlijn The Trader observed signs of buyer exhaustion, with the buy/sell pressure delta showing an oversold signal. Additionally, cryptocurrency market commentator Ted Pillows suggests that BTC may be approaching the final phase of the Wyckoff Accumulation pattern. Should Bitcoin successfully break above the $110,000 mark, bullish projections might see BTC soaring to around $130,000 rather rapidly.
Moreover, Bitcoin is demonstrating a robust technical structure, maintaining strong support at the $104,000 mark. However, recent trends suggest that exchange activity is starting to show signs of fatigue as retail investors remain cautious and avoid market participation. As of now, Bitcoin is priced at $104,128, reflecting a modest 0.2% increase over the prior 24 hours.
