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bitcoin

Bitcoin ‘Rainbow Chart’ Signals Buying Opportunity, But Weak Demand Raises Concerns

Ash Tiwari
by Ash Tiwari
4 weeks ago
·
Posted in Bitcoin News
Trusted Editorial content, reviewed by leading industry experts and seasoned editors. Ad Disclosure

According to a recent post on X by crypto analyst Crypto Rover, the Bitcoin (BTC) Rainbow Chart is flashing a buy signal, suggesting that the leading cryptocurrency may be on the cusp of a significant upward move. However, weak market demand could pose a risk to this bullish momentum.

Bitcoin Rainbow Chart Flashes Buy Signal

After hitting a new all-time high (ATH) on May 22, BTC has spent nearly a month consolidating between the $100,000 and $110,000 range, without showing a clear directional bias. Now, one of the most well-known indicators – the Bitcoin Rainbow Chart – is pointing toward potential upside for the top digital asset.

Related Reading: Bitcoin Riding Global Liquidity Wave? Analyst Eyes $150,000 Target

Crypto Rover shared the following chart, showing BTC currently trading in the light green, or “buy”, zone of the Rainbow pattern. Historically, Bitcoin has often entered this zone shortly after each four-year halving, signalling potential growth ahead.

rainbow
Source: Crypto Rover on X

For the uninitiated, the Bitcoin Rainbow Chart is a long-term valuation tool that uses a logarithmic growth curve with color bands to show where Bitcoin’s price stands relative to historical trends. Each color band suggests a different market sentiment, helping investors identify potential overvaluation or undervaluation zones.

While the Rainbow Chart’s buy signal is promising, the broader demand for BTC appears lackluster. In a recent CryptoQuant Quicktake post, contributor Darkfost pointed out that sluggish demand is limiting Bitcoin’s ability to break out.

Darkfost shared the following chart, which compares new BTC supply to coins held inactive for over a year – used to gauge apparent demand. When the ratio moves above zero, it typically indicates strong market demand.

apparent demand
Source: CryptoQuant

Since the last local top in May, this apparent demand metric has been gradually declining, though it remains sufficient to absorb current selling pressure. In essence, while BTC is managing to stay above the $100,000 level, demand is fading – a potential headwind.

However, some encouraging signs remain. In a separate X post, crypto trader Merlijn The Trader noted that the buy/sell pressure delta is showing an oversold signal, implying that short-term sellers could be nearing exhaustion.

merlijn
Source: Merlijn The Trader on X

BTC Wyckoff Accumulation Nearing End?

Crypto market commentator Ted Pillows added that BTC may be in the final stage of the Wyckoff Accumulation pattern. According to Ted, a decisive breakout above $110,000 could send Bitcoin surging to $130,000 “in no time.”

ted
Source: Ted on X

Overall, Bitcoin continues to demonstrate a healthy technical structure, maintaining support at the $104,000 level. The market also saw notable deleveraging following yesterday’s US Federal Reserve meeting.

Related Reading: Bitcoin Rally Lacks Retail Mania – Why This Could Mean More Room To Run

That said, Bitcoin exchange activity is starting to show signs of fatigue, while retail investors continue to stay on the sidelines. At press time, BTC trades at $104,128, up 0.2% in the past 24 hours.

bitcoin
BTC trades at $104,128 on the daily chart | Source: BTCUSDT on TradingView.com
Featured Image from Unsplash.com, charts from CryptoQuant, X, and TradingView.com
Editorial Process for bitcoinist is centered on delivering thoroughly researched, accurate, and unbiased content. We uphold strict sourcing standards, and each page undergoes diligent review by our team of top technology experts and seasoned editors. This process ensures the integrity, relevance, and value of our content for our readers.
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Ash Tiwari

Ash Tiwari

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Ash is a seasoned freelance editor and writer with extensive experience in the blockchain and cryptocurrency industry. Over the course of his career, he has contributed to major publications, playing a key role in shaping informative, timely content related to decentralized finance (DeFi), cryptocurrency trends, and blockchain innovation. His ability to break down complex topics has allowed both seasoned professionals and newcomers to the industry to benefit from his work. Beyond these specific roles, Ash's writing expertise spans a wide array of content, including news updates, long-form analysis, and thought leadership pieces. He has helped multiple platforms maintain high editorial standards, ensuring that articles not only inform but also engage readers through clarity and in-depth research. His work reflects a deep understanding of the rapidly evolving blockchain ecosystem, making him a valuable contributor in a field where staying current is essential. In addition to his writing work, Ash has developed a strong skill set in managing content teams. He has led diverse groups of writers and researchers, overseeing the editorial process from topic selection, approval, editing, to final publication. His leadership ensured that content production was timely, accurate, and aligned with the strategic goals of the platforms he worked with. This has not only strengthened his expertise in content strategy but also honed his project management and team coordination skills. Ash's ability to combine technical expertise with editorial oversight is further bolstered by his knowledge of blockchain analysis tools such as Etherscan, Dune Analytics, and Santiment. These tools have provided him with the data necessary to create well-researched, insightful articles that offer deeper market perspectives. Whether it’s tracking the movement of digital assets or analyzing blockchain transactions, his analytical approach adds value to the content he produces, ensuring readers receive accurate and actionable information. In the realm of content creation, Ash is not limited to just cryptocurrency markets. He has demonstrated versatility in covering other emerging technologies, market trends, and digital transformation across various industries. His in-depth research, coupled with a sharp editorial eye, has made him a sought-after professional in the freelance writing community. From developing editorial calendars to managing content delivery schedules, he has honed a meticulous approach to project management that ensures timely, high-quality work delivery. Throughout his freelance career, Ash has consistently focused on improving audience engagement through well-researched, insightful, and relevant content. His ability to adapt to the evolving needs of clients, whether it's enhancing the visibility of digital platforms or producing thought-provoking pieces for a wide range of audiences, sets him apart as a dynamic force in the field of digital content creation. His contributions have helped to shape a well-rounded portfolio that showcases his versatility, technical expertise, and dedication to elevating the standards of journalism in blockchain and related sectors.

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