On several occasions last year, crypto advocates discussed the failure of many pricing models utilized to predict the future value of bitcoin. However, bitcoin’s value has increased 36% in the last month, putting its price below the lowest band of the rainbow chart at the end of 2022 and into the darkest band of the rainbow chart.
Bitcoin’s rainbow chart is once again in the news
Last year, especially in August 2022 and at the end of the year, the cryptocurrency communitydiscussedthe various charts and pricing models people use to predict where the bitcoin price will go next. Over the past decade, many models have followed a particular price pattern for Bitcoin fairly closely. People would often utilize charts and models such as the Rainbow indicator, the Golden Ratio multiplier, the Fibonacci sequence, the logarithmic growth curve, and the Plan B stock to flow (S2F) pricing model.
As the community felt the grip of crypto winter and pricing models failed to predict the bottom of the bitcoin price, people began dismissing bitcoin pricing models and mock indicatorslike the Rainbow chart. This week, however, people noticedthat the bitcoin price on the rainbow model entered the lowest and darkest zone. Rainbow charts are placed on many Bitcoin-focused websites that present charts and data, such asblockchaincenter.netandlookintobitcoin.com
Charts on blockchaincenter.net show that the price of bitcoin has not broken the darkest and lowest bands of the rainbow, while charts on lookintobitcoin.com show it has. Lookintobitcoin.com summarizes how the rainbow chart, or colored bands, overlapthe logarithmic growth curve channel of BTC. While it can signal when to buy and when to sell, the website “there is no guarantee that past performance fits within the Rainbow Channel will continue to play out in the future.” It emphasizes that.
full#Bitcoin Rainbow price chart indicator 🙂 pic.twitter.com/lIbUOd3bI4
– Crypto believer (@CryptoSportsIO) January 2023 Jan 17
Crypto Twitter discussesBitcoin’s grand re-entry into the rainbow.” Rainbow Price Chart Reintegration,” Titan of Crypto tweeted. “Firesale!” After a drop below the blue band in [bitcoin], [bitcoin] managed to get back into the rainbow. Did you dare scoop up [bitcoin] when it was falling?” The individual asked.” Bitcoin’s rainbow chart predicts the future … it shows when to buy and when to sell throughout Bitcoin’s history. You need to study this to get really comfortable with the long term price of bitcoin,” writes another fanof the rainbow chart.
Redemption of the Rainbow Chart has been ahot topic on social media, with somesuggesting the entry is a bullish signaland othersskeptical. While the indicator showsthat the price of BTCis trending higher, a correction is well within the realm of possibility. Additionally, the rainbow chart is in good shape, but thelogarithmic growth curve chartis way off.
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