Bitcoin (BTC) regained the $21,000 level in November after weeks of consolidation around $20,000 marked by sideways price movements. In particular, investors are investigating possible signals for the asset’s price floor that would likely herald another rally.
Indeed, Bitcoincenter’s rainbow price chart is one of the tools used to measure Bitcoin’s performance by highlighting the asset’s past trends in addition to insights into long-term price movements. The tool is also known as the fun chart that shows the market sentiments in colored bands.
The chart’s forecast indicates that Bitcoin is likely to regain a critical support level by the end of 2022, suggesting that the flagship cryptocurrency could potentially regain the $25,000 level, which is in the ‘Basically a Fire Sale’ band. . Notably, the current price of Bitcoin is also active in the zone.
In addition, the trends in the rainbow chart indicate that Bitcoin may have bottomed out. For example, when Bitcoin traded in the “Basically a Fire Sale” zone in March 2020, the asset kicked off a historic rally that resulted in a record high of $69,000 in late 2021. Bitcoin’s latest consolidation was marked by a drop in volatility with the price stabilizing.
Impact of Bitcoin possible price floor
Moreover, with Bitcoin trading in the $20,000 range, part of the market believes the asset could have found the floor. If the bottom is confirmed, investors will be able to maximize their capital efficiency to achieve the maximum possible upside potential with the least downside risk.
At the same time, caution should be exercised when using the Bitcoin rainbow chart as the bands adjust over time to better fit past performances. Elsewhere, the color bands follow logarithmic regression and are not part of the scientific basis.
It is worth noting that the crypto community is bearish for Bitcoin towards the end of the year. Specifically, the CoinMarketCap crypto community predicts that Bitcoin will trade at an average price of $21,237 by the end of December 2022, according to data obtained by Finbold on Nov. 5.
The price represents a decrease of less than 1% from the value of Bitcoin at the time of publication. The projection is based on votes from 12,953 community members using the price estimation tool.
Bitcoin Technical Analysis
Interestingly, Bitcoin’s long-term technical analysis expresses mixed feelings for the asset. For example, a month-long technical data summary emphasizes neutrality at seven with “buy” at 10. Moving averages are on sale at nine, while oscillators are for “buy” at four.
In this case, the $25,000 level is considered a critical psychological point for Bitcoin as it aligns assets to regain the highs seen towards the end of last year. Meanwhile, Bitcoin was trading at $21,250 by press time after several attempts to break the level.
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