Bitcoin Rainbow Chart Mimics 2020 Trend, But BTC Dominance Index Hints Otherwise

Investors' confidence in Bitcoin [BTC] has somewhat dwindled as the king of crypto fails to go above $69k. However, the Bitcoin Rainbow Chart revealed that BTC was actually mimicking its 2020 trend post-halving.

Investors’ confidence in Bitcoin [BTC] have taken a hit as the king of crypto’s several attempts to breach the $69k resistance have failed.

However, a look at the Bitcoin Rainbow Chart revealed that BTC was actually mirroring its 2020 trend post-halving.

Does this mean that BTC is all set to kickstart a rally?

The best time to buy Bitcoin?

Bitcoin’s price volatility has reduced over the last few days. This spelled trouble for BTC as it struggled to go above $69k.

However, investors should not be disheartened yet, as BTC was mirroring its 2020 post-halving behavior.

AMBCrypto’s analysis showed that after months of its third halving, the Bitcoin Rainbow chart indicated that the coin entered the “BUY” zone. BTC’s price went on to skyrocket after staying in that zone for a few months.

A similar trend was observed in BTC’s 2024 Rainbow chart, which indicated that the coin was currently in the “BUY” zone.

If that is to be considered, then this might just be the last opportunity for investors to buy BTC at a lower price before it moved up and entered the accumulate and HODL zones.

AMBCrypto then analyzed BTC’s on-chain metrics to see whether investors have considered buying BTC as suggested by the Rainbow chart.

We found that its Exchange Outflow dropped last week after spiking on the 24th of May. Its Supply on Exchanges increased, indicating that investors chose to sell instead.

A look at CryptoQuant’s data showed that BTC’s net deposit on exchanges was high compared to the last seven-day average, further hinting at high selling pressure.

Apart from this, its Coinbase Premium was red, indicating that selling sentiment was dominant among U.S. investors.

Bitcoin’s troubles are far from over

AMBCrypto then checked whether the increase in selling pressure could lead to a price correction.

We found that investors weren’t following the Bitcoin Rainbow chart, as its aSORP was red, indicating that more investors were selling at a profit. In the midst of a bull market, it could signal a market top.

At press time, BTC’s fear and greed index was at 74, indicating that the market was in a “greed” phase. Whenever the metric reached that level, it signaled a price correction.

AMBCrypto’s analysis showed that BTC’s technical indicators were mostly bearish. For example, The MACD showed a possibility of a bearish crossover.

The Relative Strength Index (RSI) registered a decline, indicating a price drop soon. Nevertheless, the Chaikin Money Flow (CMF) remained bullish as it headed upwards.