Bitcoin Onchain

There are many onchain tools, and current traceability, which allows us to measure and evaluate whether bitcoin or another main cryptocurrency is in a theoretical purchase zone or, on the contrary, it is already far from this zone or even, in a possible overbought zone and is about to start. to turn its price, downwards.

Today, in this article, I would like to talk to you about one of the onchain fundamental analyses, which I usually follow and which, because of how colorful it is, I observe more regularly.

And it is that I always liked the rainbow, seeing it in the sky when it rains or it has rained, and if it is also combined with another of my passions, such as the graphs that analyze the price of an investment asset, well I am like a child with new shoes.

Let’s learn today about the rainbow, in chart, and for bitcoin.

The Rainbow Chart is a popular tool used in the cryptocurrency community, specifically for analyzing the historical price performance of Bitcoin. It provides a visual representation of Bitcoin’s price movements over time and helps investors and traders identify potential trends and market cycles.

The Rainbow Chart is based on the logarithmic scale of Bitcoin’s price and consists of several colored bands or zones. Each zone represents a specific price range, and the colors indicate the degree of bullishness or bearishness based on historical data.

Typically, the Rainbow Chart includes seven zones, ranging from deep red (indicating a bear market) to bright green (indicating a bull market). The zones in between represent various stages of the market cycle, reflecting different levels of investor sentiment and price trends.

The colors for the Rainbow Chart:

Green Zone: This zone represents the beginning of a bull market, where prices are historically low and are expected to start rising. It indicates a good time to accumulate or buy Bitcoin.

Yellow Zone: As the market starts to gain momentum, the price enters the yellow zone. This indicates a moderate bullish trend, with prices gradually increasing. It suggests that Bitcoin is moving towards higher levels.

Orange Zone: The orange zone indicates a strong bullish trend, with prices rising significantly. This phase is characterized by increased buying pressure and positive investor sentiment.

Red Zone: The red zone marks the transition from a bull market to a bear market. It suggests that prices have reached unsustainable levels and a correction or market downturn is likely.

Light Red Zone: In this zone, the bear market becomes more pronounced, with prices experiencing a significant decline. It indicates a time of caution and suggests that selling or shorting positions may be appropriate.

Dark Red Zone: This zone represents a deep bear market, with prices dropping considerably. It suggests a highly unfavorable market condition for Bitcoin, and investors should exercise extreme caution.

Gray Zone: The gray zone is not often present in the Rainbow Chart but may be included to represent periods of price consolidation or uncertainty.

The rainbow chart gave us hope in times of depressing price action (despite significant bitcoin adoption progress!).

In the following graph, we can observe the early years of bitcoin and its interaction with the rainbow graph.

The current situation of the rainbow for bitcoin indicates that it is moving away from its low zone and that it has a long-term path to go up, and also go up a lot.

The current situation of the rainbow for bitcoin indicates that it is moving away from its low zone and that it has a long-term path to go up, and also go up a lot.

Observation also shows that as it rises (in a logarithmic graph) its curve flattens, because it is impossible for it to rise with the same verticality, although it will continue to do so, in my opinion.

Halving 2024 bitcoin:

Reminder that in addition, next year, 2024, around the months of March or April, brings the new halving for bitcoin, which should boost the price at least X10 above the pre-halving lows (this is not a recommendation, it is an observation about what has happened in its past history and should at least make that move, following the pattern).

As always, do your own research (DYOR), and without it being a purchase recommendation, at the level of analysis (TA and onchain), not having bitcoin is still not understanding anything about decentralized finance.

Good luck with your investment decision and nice weekend to you.