Rainbow Chart Signals Bitcoin's Lowest Valuation Since 2016
A new metric called the Rainbow Chart has been applied to Bitcoin's price movements, and it appears to be signaling that prices have reached a low point. According to CryptoQuant analyst Axel Adler Jr., Bitcoin is currently trading in a region that could be described as a 'panic selling price' on the Rainbow Chart pattern.
The Rainbow Chart compares the current price of Bitcoin to its long-term historical trend, showing how far the market has deviated from it. Currently, the volatility-adjusted Z-Score for Bitcoin has dropped to -2.293, which is the lowest level seen since 2016. This indicator takes into account changes in volatility across different market cycles.
The current reading of -2.293 surpasses the level seen at the bottom of the previous bear market in 2022, according to Adler Jr. However, it's essential to note that this doesn't definitively confirm a reversal in direction for Bitcoin's price.