Key Points
- The Bitcoin Rainbow Chart and other key metrics indicate a ‘BUY’ signal for Bitcoin’s current value.
- Market experts predict a bullish Q4 and 2025 for Bitcoin, suggesting a great buying opportunity for investors.
The current market conditions for Bitcoin [BTC] are indicating a ‘BUY’ signal, according to the Bitcoin Rainbow Chart and other key metrics. Despite Bitcoin’s price hovering within the $60K—$70K range for the past seven months, the existing value of BTC presents a promising buying opportunity ahead of a projected bullish Q4.
Understanding the Bitcoin Rainbow Chart
The Bitcoin Rainbow Chart, which assesses BTC valuation based on historical prices, currently places BTC’s value within the ‘buy’ zone. This chart uses a spectrum of rainbow colors to visually represent the valuation of BTC, with lower color bands indicating undervalued BTC and higher bands suggesting an overheated market and potential corrections. Since its retracement in March, BTC has remained securely within the ‘accumulate’ and ‘buy’ zones.
Is Bitcoin Undervalued?
In addition to the Rainbow Chart, other key valuation metrics also suggest that BTC is relatively ‘cheap’ at its current value. The Pi Cycle Top indicator, which has historically captured BTC cycle tops with a 3-day accuracy, indicates that BTC is far from hitting this cycle’s top. This is evidenced by the significant gap between the 111-day MA (Moving Average) and 350-day MA multiple (350 DMAx2). This wide gap suggests that BTC’s bull run could continue.
The Puell Multiple, another metric that assesses whether BTC is overpriced using BTC miners’ profitability, also suggests that BTC is currently undervalued. According to the press time reading, 0.73, BTC is significantly underpriced, presenting a great buying opportunity for investors.
Notably, key industry figures and firms have predicted high BTC price targets for the end of 2024 and 2025. Standard Chartered Bank has projected that BTC could reach $250K by 2025. CK Zheng, founder of crypto-focused hedge fund ZX Squared Capital, also predicts that BTC will hit an all-time high in Q4 2024, regardless of the outcome of the US elections. He cites high US national debts and fiscal deficits as reasons why BTC would become more lucrative amid the Fed rate cut cycle.
If these predictions prove accurate, Q4 2024 and 2025 could bring substantial BTC returns, potentially breaking above the 7-month long price range. As such, the current BTC value could be considered significantly discounted.