Thirteen months ago, Bitcoin [BTC] was trading at $25.7k. The market sentiment was grim, with inflation fears dominating the conversation, and the next halving event still months away. Fast forward to September 2023, and hope was still distant, as investors braced themselves for further uncertainty. However, in October, the landscape changed with rumors swirling about a potential spot ETF approval from the SEC. At the same time, inflation appeared to have peaked, giving Bitcoin a much-needed boost.
These developments brought fresh momentum to Bitcoin, pushing its price upward to an all-time high of $73.7k in March 2024. With October on the horizon once again, investors are asking: can this month trigger a similar rally that breaks through 2024’s highs?
Bitcoin Rainbow Chart – A Bright Spot For Investors
A unique tool, the Bitcoin Rainbow Chart, offers a playful but insightful perspective on Bitcoin’s long-term price trends. Using a logarithmic scale, it color codes Bitcoin’s price points to show whether investors should be buying, holding, or selling. Though not precise, it has gained a reputation for accurately signaling cycle tops and bottoms, particularly the latter.
Recently, Bitcoin’s price movement has flirted with the lower ranges of the Rainbow Chart, nearing the “Bitcoin is dead” zone. However, the chart currently places BTC in the “fire sale” category, indicating that now might be an opportune moment for investors to consider accumulating. In comparison to previous market cycles, the latter half of October historically aligns with the start of Bitcoin’s bullish runs. Could this October be a precursor to another rally, perhaps one that gains traction post-halving?
Holder Profitability Amid Downward Trends
Despite Bitcoin‘s robust performance earlier this year, the market has seen a six-month downtrend since April, leading to declining prices and investor profitability. At press time, Bitcoin’s Net Unrealized Profit/Loss (NUPL) metric stood at 0.47. A reading of 0.47 signifies that the overall market capitalization is still greater than the realized cap, indicating that a sizable portion of holders are still in profit.
While the NUPL has decreased along with Bitcoin’s price, this decline suggests that profit-taking by investors has slowed. In fact, many holders seem to be resisting the urge to sell, creating room for price appreciation in the coming months. Historically, a NUPL reading above 0.7 signals the peak of a market cycle. Given the current levels, Bitcoin might still have significant upside potential before reaching that point.
Also Read: Ethereum ETFs Lag Behind Bitcoin – $548M Outflows vs. $18.7B Inflows – Can ETH Catch Up?
Is a Bull Run on the Horizon?
As the market approaches the final quarter of the year, all eyes are on October. The combination of ETF approval rumors, inflation stabilization, and Bitcoin’s historical patterns suggest that a rally could be on the horizon. The Rainbow Chart adds to this optimism, implying that Bitcoin is in a favorable buy zone. Moreover, with the halving event due next year, investors are speculating whether this October could mark the beginning of another bull run.
While no one can predict Bitcoin’s future with certainty, historical patterns, key metrics, and market sentiment provide plenty of reasons to be optimistic. If Bitcoin follows its cyclical tendencies, we could be on the cusp of another remarkable price rally.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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