Bitcoin has been facing some losses recently, despite the positive news surrounding it. One such piece of news is the Spanish banking giant BBVA offering Bitcoin and Ethereum trading to its clients. This comes at a time when the market is experiencing some turbulence.
The Bitcoin Rainbow Chart, which is a logarithmic growth curve overlaid with rainbow colors to visualize long-term Bitcoin trends, currently shows that the price is still considered cheap. In previous cycles, the chart has at least touched the “Seriously sell!” territory, but this time it hasn’t even tested the “Is this a bubble?” territory. This indicates that we may not be close to a market top yet.
One reason why investors shouldn’t sell their Bitcoin yet is the behavior of the Relative Strength Index (RSI). In 2017, the RSI was above 70 for multiple weeks as the price reached new highs. In 2021, the price and RSI showed a bearish divergence, leading to a 50% correction before entering a bear market. Currently, the RSI has fallen below neutral 50, resembling the correction seen in the summer of 2021. A similar correction could take Bitcoin to $54k.
Another indicator to consider is the Bitcoin Dominance Chart. Unlike the previous cycle tops, where Bitcoin Dominance was near multi-month lows, it is currently on an uptrend, making new highs not seen since March 2021. This trend suggests that investors should be cautious of further price drops, but long-term investors can find comfort in the fact that the dominance and RSI trends do not match the previous cycle tops.
Overall, despite the recent losses in the market, there are still reasons to hold onto Bitcoin for now. It’s important to consider all indicators and trends before making any investment decisions. Stay informed and stay cautious in this ever-changing market.