Journalist
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Key Takeaways
Is BTC still ‘cheap’ at current prices?
It’s in a great ‘buy’ position, as per the Bitcoin Rainbow Chart.
Is it great for a short-term buy?
For mid to long-term investors, yes. Not for short-term play, as the expected volatility can chop near-term bulls.
Bitcoin [BTC] is at a late market cycle stage right now. However, ahead of the first Fed rate cut in 2025, is BTC still worth buying, or should you lock in profits?
Well, the Bitcoin Rainbow chart, a composite valuation model that uses historical data, flashed a firm ‘BUY’ signal at the time of writing.
Source: Blockchain Center
At the press time level, at around $116k, BTC seemed to be in a similar valuation color band as it was before the last November rally.
In the past, BTC’s cycle has peaked around ‘is this a bubble’ or ‘FOMO intensifies’ bands. As it stands, Bitcoin’s price is three bands away from these risk zones.
A ‘monster’ rally incoming?
In fact, Fundstrat’s Tom Lee is bullish too, citing the global interest rate easing cycle that could fuel BTC and Ethereum [ETH] in Q4.
“The second is monetary liquidity sensitivity, global central banks easing, that’s Bitcoin and Ethereum and seasonally strong. I think that they could make a monster move in the next 3 months, like huge.”
In the near term though, the market sentiment appeared bullish on the Fed rate decision day. However, it was somewhat neutral to slightly negative afterwards, per Options market data.
Notably, Amberdata’s 25 Delta Risk Reversals (25RR) was 2.4 for Options expiry on 17 September.
After that, the 25RR was either zero or negative (-1), suggesting a premium for calls (bullish bets) and increasing demand for put options (hedging) into the weekend.
Source: Amberdata
Does that mean $117k will be tagged mid-week? Well, maybe, since it is also a price magnet and liquidity zone. And, a sustained and decisive move above $117k could set the path to reclaim $120k.
However, there also seemed to be considerable liquidity clusters southwards at $108k and $112.8k. In short, a downside move could push Bitcoin to these levels.
Source: CoinGlass
Overall, the Bitcoin Rainbow Chart revealed that BTC is still a ‘relative discount’ and a ‘buy’ at the press time price in light of the positive macro landscape.
However, short-term volatility could push the asset higher or to $113k, before gathering momentum for a potential Q4 rally.