Has Crypto Bottomed? Let's Check Why The Bitcoin Rainbow Chart Is Signaling A Bitcoin Bounce

October 7, 2022 at 2:56 am, No comments

Let's check if we are at the bottom or close to it. The Bitcoin rainbow chart is signaling a reversal within the next weeks/month to restart a new bull market.

If you have been following Bitcoin or cryptocurrency markets, you must have noticed that the price has been on a downward trend in a bear market for the past few months. However, with just a few weeks left until the end of 2022, Bitcoin's price seems to be getting back up. But is this going to be enough to push it over the top? Has Bitcoin and the extended crypto market bottomed?

Let's discuss the Bitcoin rainbow chart, a technical analysis chart that could give us an answer to all these questions.

So let's get started.

The Bitcoin Rainbow Chart

Bitcoin Rainbow Chart is a tool created by the cryptocurrency community to help better understand how Bitcoin's price moves. The chart was developed as a way to visualize the movement of Bitcoin's price over time, including a histogram and moving average.

The chart has been around for the past 8 years, but it wasn't until recently that it started to gain traction in the mainstream press. Its creator is Azop, who first released this chart on Reddit's social media platform. It was originally created for huge crypto investors, but later on, it was released to the public. Besides, the Bitcoin Rainbow Chart is a free tool that anybody can use to track the price of Bitcoin and other cryptocurrencies. It's also possible for traders to create their own charts using this tool, but it requires more technical knowledge than most people have at their disposal.

This chart resembles a very creative rainbow that represents different colors associated with different peaks and troughs in the market of Bitcoin. The chart is divided into nine different colors, and each color represents a different signal like bubble burst, time to buy, time to sell, etc. Each color has its own unique pattern that shows how the market of Bitcoin is expected to move in the future.

So now you must be wondering what each color in the chart represents and what the meaning of each signal is. Well, let's take a look at that now:

What Does it Mean by Each Color in the Bitcoin Rainbow Chart?

Following are the major colors of the bitcoin rainbow chart and what they mean:

Indigo (Blue): Bitcoin is on sale!

The indigo color in the chart means that's the lowest price of Bitcoin right in the market. So, you should buy now because it's the best moment to make a profit. After this price hits its lowest point, the market is expected to start going up again, and you can sell your coins at their highest price point later on.

Bluish Green: Buy It

When the chart is in a bluish-green color, it means that Bitcoin is expected to rise in value. So it indicates that you should keep buying and holding for some time until this chart gives the next signal.

Green: Accumulate

The green color in the bubble chart indicates a bullish trend in the market. It is a good time to buy coins from the market because prices remain low. You should hold your assets for some time until prices hit their peak again.

Light Green: Still Cheap

Similarly, the light green indicates that the prices are on buy area, so you should keep accumulating, patiently waiting for the following bull run. In bear markets, this area could signal a good time to go short. However, it's important to note that this doesn't mean that you should sell all your holdings, as the drop in prices may be temporary, and you might lose out on potential profits.

Yellow: HODL

The yellow color in the Bitcoin Rainbow Chart indicates neutrality. There is no clear sign to sell or buy, so the best action is to keep your holdings until the direction is better defined.

Orange: Is this a bubble?

The orange color shows that there could be a bubble in the market, and you should be careful about investing in it. You can either stay away from the stock or sell your holdings when the orange color starts all the way up to dark red, which means the bubble will burst soon.

Dark Orange: FOMO intensifies

The dark orange color in the above-given rainbow chart means that at this point, Bitcoin investors have started to fear of missing out (FOMO). This means that most market investors have developed a fear of missing the party. This is the moment when inexperienced investors and traders enter the market, and for experienced and professional investors this is a good sign to consider to sell and take profits.

Red: Sell!

It means that all the big and small investors should start selling their Bitcoin holdings as the prices will be near a peak, causing a significant price drop afterwards, or even a shift in market direction. You can either stay away from buying or sell your holdings when this color before it gets too late to get out of the bubble.

Dark Red: Maximum bubble territory

It's a good time to make a huge profit, the dark red in the Bitcoin Rainbow Chart means the bubble will burst soon. The price of Bitcoin has reached its peak, and it's time to sell your assets. The price will start going down shortly, so you should sell your coins now at their highest point before the bubble bursts.

So these are the meanings of different colors in the Rainbow Chart, and different types of investors can indicate the market and act according to their investing style (bull or bear).

But now you must be wondering about the current crypto market situation, and most of you must would like to know if the crypto market has bottomed.

Well, that might be no the exact case; let's find out in the following section.

Has Crypto Bottomed?

A lot of people are wondering whether the crypto market has bottomed or not. Well, there have been many speculations regarding this matter, and people are divided over the same.

If we look at the current situation in the Bitcoin Rainbow Chart, it certainly seems that Bitcoin has bottomed out and will head back up in a few weeks or months.

Bitcoin has reached the Indigo color, which means that it's the end of the downtrend and about to break out from this level.

As mentioned above, the Indigo color indicates that Bitcoin has reached the end of a downtrend and is about to break out from this level. This means that the price will soon start moving up after bottoming out.

So, according to the rainbow chart, it's a good time to buy Bitcoin now and hold, which will give you a chance to earn some profits when Bitcoin price will be going through the scale of colors.

What Is Bitcoin's Current and Future According to the Rainbow Chart?

The current price of Bitcoin is around $19.5K, and the future seems to be bright for this cryptocurrency. According to the chart, the price is expected to rise in the coming weeks and months, making it a good time to invest in Bitcoin now.

So, if you want to buy Bitcoin now, it's a good time to do so. The price of BTC has been steady over the last few weeks around $20k, which may indicate a final capitulation of the bears and the start of an accumulation from the bulls, before we could see a reversal to restart the next bull cycle.

Conclusion

The cryptocurrency market is currently in a bear market, and we have seen the Bitcoin Rainbow Chart signal this trend.

Bitcoin seems to have found a bottom, and now we are starting to see signs of a reversal that will be confirmed within the next weeks. The price of Bitcoin has been falling for the past few months, and its value has been dropping dramatically, reaching the indigo color in the rainbow chart. This could be a sign that we are already at or very close to the final bottom, which would mean that we could see an end to this bear market soon.