Key Points
- Bitcoin’s current price level is considered as “accumulate” zone according to the Bitcoin Rainbow Chart.
- Prediction models and analysts forecast a significant Bitcoin rally in the upcoming months.
Bitcoin [BTC] experienced a significant rally of over 68% in Q1 2024. However, Q2 saw a decrease of 7% in BTC value, with prices oscillating between $60K and $71K. The Bitcoin Rainbow Chart is crucial for determining if Bitcoin is overvalued or undervalued.
The Year-to-Date (YTD) gains for BTC have been over $22K, which is a 50.3% increase. Yet, Q2 headwinds such as interest fears and Middle East tensions have caused some investors to retreat, contributing to last week’s drawdowns. Now, with Bitcoin back above $66K, the question arises if it is overvalued or undervalued.
Bitcoin Rainbow Chart and Stock-to-Flow Model
The Bitcoin Rainbow Chart suggests that the current price level of BTC is in the “accumulate” zone. This chart is a visual representation of Bitcoin’s valuation based on historical data. It uses a logarithmic scale that includes color bands indicating buying (blue, green) and selling (orange, yellow) zones.
In the past three halving cycles, BTC was significantly undervalued after the halving. Although the current BTC price level is slightly higher on the scale than the last cycles, it is still within the “accumulate” zone. This suggests that BTC is still undervalued and not overheated.
The Stock-to-Flow (S/F) model also indicates more upside potential for Bitcoin’s price. This model predicts future BTC prices by dividing its circulating supply by the annual number of mined coins. It forecasts that BTC will cross $100K in Q3 2024 and hit over $450K at the end of 2025.
Analysts’ Predictions
Standard Chartered predicts that Bitcoin can hit $200K in the next 18 – 24 months. Geoff Kendrick, head of digital assets research at Standard Chartered, sees spot BTC ETFs maturity as a driving factor. He anticipates an inflow of $50B to $100B in the next 18-24 months.
Bernstein analysts revised the BTC price projection from $90K to $150K by mid-2025, citing “more-than-expected” flows from spot BTC ETFs. Ki Young Ju, the founder of CryptoQuant, also noted that “new whales” have now doubled their BTC accumulation spree.
BitMEX founder and CIO of Maelstrom, Arthur Hayes, predicts a favorable summer for BTC, citing the “sovereign bonds market” issues. He also accurately predicted last week’s massive sell-off, citing the US tax season and Bitcoin’s halving.
Bitcoin price prediction models, including the Bitcoin Rainbow Chart and analysts, all point to further upside for BTC in the next few months. If these predictions are confirmed, then current BTC prices are a massive bargain.
