When to Buy Bitcoin? Let’s See What The Rainbow Chart Suggests

When is the right time to buy Bitcoin? It's the million-dollar question. You can follow famous traders, you can go on your gut feeling, you can study the price charts. But what if there was a convenient tool that claims to give you a really basic idea of the opportune time to buy? And would you believe it?

Should investors buy Bitcoin?

The Bitcoin Rainbow Chart is a visual tool tracking Bitcoin's (BTC) historical price movements. For beginners it is user-friendly and logical. And interestingly, it has recently signaled "accumulate." Indicating that crypto enthusiasts who follow it should consider buying Bitcoin (that’s if you trust it!).

With the Bitcoin Rainbow Chart suggesting a potential buying opportunity, let’s dig into how it works and its origins.

What is the Bitcoin Rainbow Chart?

The Bitcoin Rainbow Chart is a colorful representation of Bitcoin's past performance, plotting its price fluctuations using coloured bands.

Each band corresponds to a different stage in Bitcoin's market cycle, ranging from bear market lows (hibernation) to bull market highs (charging forth). The chart serves as a general guide to where Bitcoin's price might be headed.

Here’s what the colours mean, according to the chart itself (Note: This is the chart’s specific wording):

Purple: Bitcoin is Dead. RIP.

Dark Blue: "Basically a Fire Sale" — Historically, can be a good time to buy.

Teal: BUY!

Green: "Accumulate" — Buying recommended.

Light green — Still cheap! Potential for accumulation.

Yellow: "HODL" — Hold your Bitcoin.

Light Orange: "Is this a bubble?" — Proceed with caution.

Dark Orange: "FOMO intensifies" — Fear of missing out drives prices higher.

Red: "Sell. Seriously, SELL!" — Potential market peak.

Maroon: Maximum bubble territory — sell everything and hide in a bunker.

The Rainbow Chart's track record

Introduced around 2014, the Rainbow Chart has demonstrated a reasonable degree of accuracy in its predictions over time. As Bitcoin adoption and market capitalisation increase, the chart's curve gradually flattens, reflecting the asset's maturation.

What is the current phase of the Bitcoin Rainbow Chart?

As of 30th May 2024, we are in teal territory. If you believe in the chart, then it is signalling “buy”.

With Bitcoin currently trading around US$68,000, the chart indicates we're in the accumulation zone. If historical patterns repeat, the price could reach the "Maximum Bubble Territory" (red zone) by year's end, like it did in 2017.

2025 Predictions

Based on the Rainbow Chart, Bitcoin's price could potentially reach between $152,000 and $210,000 in 2025, entering the "Maximum Bubble Territory." This blazing red signal, according to the chart, is a selling opportunity.

However, before you get all excited and start buying luxury cars and exotic holidays, you will need to calm the farm. Past performance doesn't guarantee future results.

The Rainbow Chart is not a foolproof predictor of Bitcoin's price trajectory. Various factors, such as geopolitical events, regulatory changes, and economic downturns, can significantly impact the price. Elections also have an effect.

For example, the looming US election in November of 2024 means that a lot of markets are jumpy, not just the crypto markets.

Why the teal signal might be a good time to buy Bitcoin

Historical patterns

The Rainbow Chart has a track record of aligning with Bitcoin's past price cycles. While past performance is not indicative of the future, it does provide a point of reference.

Growing adoption

Bitcoin is increasingly recognised as a legitimate asset class by institutional investors, corporations, and even governments. This wider acceptance could fuel further price growth.

Limited supply

Bitcoin's maximum supply is capped at 21 million coins. With increasing demand and a finite supply, basic economics suggest that prices could continue to rise.

Technological advancements

Ongoing developments like the Lightning Network are making Bitcoin more efficient, more competitive, and more scalable, expanding its utility and appeal.

Conclusion: The Bitcoin Rainbow Chart

The chart offers a fascinating perspective on Bitcoin's potential price movements. While not infallible, it serves as a fun tool for understanding historical trends and gauging potential market sentiment.

While not a crystal ball, it can be a valuable tool for understanding market sentiment and historical trends.

Or you could just go outside and touch grass and get some fresh air. Both are probably good for your future.