Bitcoin’s (BTC) incredible rally hit a rough patch after November 22, as investors appear to have lost their patience waiting for the cryptocurrency to fully close the final $2,000 gap to $100,000.
Despite this decline to BTC price today of $93,721, the sentiment remains bullish.Once put in context, the correction appears minuscule as the coin remains 36.70% green in the 30-day chart.
Still, the question of what will happen to Bitcoin through the remainder of 2024 and by the first day of 2025 remains open, and the Bitcoin Rainbow chart may offer some insights into things to come.
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Bitcoin Rainbow chart analysis
The Bitcoin Rainbow chart is a tool that utilizes a logarithmic growth curve and describes investor sentiment at various price levels.
The chart is divided into nine zones with rather descriptive names: ‘Maximum Bubble Territory,’ ‘Sell. Seriously, SELL!,’ ‘FOMO intensifies,’ ‘Is this a bubble?,’ ‘HODL!,’ ‘Still cheap,’ ‘Accumulate,’ ‘BUY!,’ and ‘Basically a Fire Sale.’
At press time on Wednesday, November 27, Bitcoin was in the yellow ‘HODL!’ zone, indicating a move in either direction is possible. This makes buying somewhat unattractive but signals the danger of a major sell-off is low.
According to the chart, BTC will remain in this territory unless it moves below $83,198.37 – in which case it’d again become cheap – or above $109,707.14 – a level that inaugurates a serious possibility of an unstable bubble.
Critical Bitcoin price levels to watch on January 1, 2025
The Bitcoin Rainbow chart simultaneously offers some insights into the price points investors should be wary of come January 1, 2025. To begin with, the range of the ‘HODL!’ zone will move slightly by the New Year, and BTC will remain in the zone as long as it trades between $85,805.72 and $113,080.8.
Should the world’s premier cryptocurrency fall below the lower bound of the range, investors who have yet to gain significant exposure to Bitcoin – or who desire to increase their exposure – would gain a lucrative opportunity.
The coin is also set to become increasingly interesting to buy – though with a progressively longer likely time until the next rally – at $66,021.85, $50,815.08, and $37,452.43. A collapse below $28,494.4 would signal a profound change in the cryptocurrency market.
On the other end, crypto traders – and particularly those investors who purchased before the Donald Trump re-election-driven rally – might want to consider selling at least some of their Bitcoin should it cross above $113,080.8 as that is the point at which many will begin suspecting a bubble.
Additionally, the Rainbow Chart indicates that holding after a rally above $244,673.38 would be unwise. However, a surge beyond $330,784.01 would, again, signal a profound change in the market and could draw some of the most optimistic forecasts – such as Robert Kiyosaki’s $500,000 price target for 2025 – closer to the realm of plausible.
Finally, it is worth noting that Finbold used the ‘new’ version of the chart, which provides ranges for each zone, while the ‘old’ one offered specific price points to illustrate each individual section and calculated the levels differently.
For example, the previous version marks $77,594.59 as the optimal price to buy on January 1, 2025, and estimates the danger of a bubble would become real only above $275,000.
Featured image via Shutterstock
