Key Points
- The Bitcoin Rainbow Chart indicates that Bitcoin prices are “still cheap.”
- Current dominance and RSI trends for Bitcoin do not match previous cycle tops.
Despite recent losses, Bitcoin continues to show promising signs for investors. This comes in the wake of positive news such as Spanish banking giant BBVA offering Bitcoin and Ethereum trading to its clients.
The Bitcoin Rainbow Chart, a tool used to visualize long-term Bitcoin trends, currently suggests that Bitcoin prices are “still cheap.” Unlike previous cycles, the chart has not touched the “Seriously sell!” territory, indicating that we may not be close to a top yet.
Why You Shouldn’t Sell Your Bitcoin Just Yet
If you’re not planning to hold Bitcoin for the next decade, it might be tempting to sell during an uptrend and accumulate during the bear market. However, current trends suggest that this may not be the best strategy.
In 2017, the weekly Bitcoin RSI was above 70 for several weeks as the price set new highs. In contrast, 2021 saw a bearish divergence where the price and the RSI fell nearly 50% before recovering.
Recently, the RSI was above 70 for six weeks but quickly fell lower. It has since dropped below neutral 50, resembling the 50% correction Bitcoin saw in summer 2021. If this trend continues, Bitcoin could drop to $54k.
Bitcoin Dominance on the Rise
Another point of divergence from previous cycle tops is the behavior of Bitcoin Dominance. Currently, Bitcoin Dominance is on an uptrend, reaching highs not seen since March 2021. This suggests that investors should be cautious of further price drops.
Despite these potential risks, long-term investors can take comfort in the fact that the current dominance and RSI trends do not match previous cycle tops. This could indicate a more favorable market for Bitcoin in the near future.
