You probably haven’t heard about bitcoin in the news recently.

Can you recall this summer reading any of those screaming headlines about people cashing out their kids’ college funds to buy bitcoin or some token called bitconnect?

That’s how you know it’s probably bargain bin time for cryptocurrencies if using that as a quick check does indeed hold up (of course markets are more complex and unpredictable than that).

It’s when everyone’s going crazy for bitcoin that you don’t want to buy. When those Black Friday Shoppers are climbing over each in line and stampeding the doors down, it’s because the prices are that low.

People going crazy for the higher bitcoin price have the misfortune of getting their psychology reversed the wrong way, often to their financial detriment, usually as a consequence of relenting to greed, envy, fear of missing out (FOMO), or herd mentality laziness (HML).

Before explaining how the Bitcoin Rainbow Chart uses the principle illustrated above to provide a simple Buy, Hold, or Sell recommendation tool to beginning and seasoned BTC investors, here is a brief explanation of why Bitcoin is so popular.

Peer to Peer Cash: Why Bitcoin Is So Popular

Bitcoin has become enormously popular since its inception over a decade ago now in January 2009. It is a much sought after digital commodity, accepted by a growing roster of merchants for e-commerce payment, and considered an investment grade asset by institutional hedge funds.

Billions of US dollars’ worth of BTC is traded over crypto exchanges every 24 hour period. What makes Bitcoin so popular?

The original product that launched the crypto segment, Bitcoin has:

  • Been around longer than any other crypto
  • Has more computers validating it
  • Has never been hacked or 51% attacked
  • Continues to grow in network nodes and global hash encryption power per second invested into securing and maintaining the value of your bitcoin holdings

Kevin O’Leary and Bank of America say yes: Will Bitcoin’s Price Increase?

Bitcoin’s price has hovered around the level of $20,000 for a coin on crypto exchanges since June. Of course, you don’t have to buy an entire bitcoin, so no sweat if you don’t have $20,000 laying around to buy a bitcoin. Exchanges sell ten dollars’ worth.

There are even ways to get a hundredth of a penny’s worth of bitcoin over the Lightning Network. But that’s a subject for another Bitcoin article.

But the price has fallen from $68,000 last November and $47,000 to start off the year 2022. The fall off from $68,000 and ensuing tumble over the first half of the year was harsh for those who entered the market near the peak price, and got stuck realizing losses or waiting still for their bitcoin to recover the market value they paid for it at exchange.

Still, the price will rebound eventually if the bitcoin price bulls turn out to be right. Kevin O’Leary, the Shark Tank panelist businessman, says it will double in price just as soon as public pensions and sovereign wealth funds begin allocating one percent of their holdings to bitcoin.

He expects that in 2023. On a longer time horizon, Twitter and Block founder Jack Dorsey believes bitcoin’s price will likely increase by far more than that as it eventually becomes the world’s number one reserve currency for international settlement, ahead of the US dollar.

It might: What if Bitcoin’s Price Decreases?

There’s still a risk of losing money when buying bitcoin, especially depending on what the investor’s time horizon is for selling their BTC for cash.

Buying in a market bubble, during times of high trade volatility, and wanting your cash out next week or month with a positive return is not a scenario you can realistically guarantee or count on.

One tool that can help with calibrating your mindset toward investing responsibly is the Bitcoin Rainbow Chart.

The Bitcoin Rainbow Chart Is Screaming Buy in H2 2022

The Bitcoin Rainbow Chart has been recommending Buy since June 2022.

That’s when the price of bitcoin relative to its historic growth trend crossed into the Violet, “Basically a Fire Sale,” zone of the rainbow chart.

Since then it’s been making its rounds on crypto Twitter as a popular meme with Bitcoin bulls.

How Accurate Is The BTC Rainbow Chart?

How accurate is the Bitcoin Rainbow Chart? The chart is very accurate as a historical graph of the bitcoin price, scaled logarithmically along the price dimension.

Overlaid on the BTC price history is a rainbow color coded range of Buy, Hold, and Sell recommendations. These are categorically not accurate because they are recommendations, not statements of measuring something with a degree of accuracy.

They do however give investors an idea of protecting their holdings and taking opportunities to make profits based on bitcoin’s market cycles for those investors interested in keeping a sum of money saved in BTC over the long term worth actively managing from time to time.

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