The Bitcoin revolution brings with it many terminologies and tools that we were never taught in school or even in university but which are curious and super striking, managing to capture all our attention. Understanding the step-by-step process of how Bitcoin Cash works can help investors make informed decisions about cryptocurrency investments.
That is why it is essential to understand, in this case, what relationship the seven colors of the Rainbow can have with the digital currency with the most significant weight today.
What does the Rainbow represent in the Cryptographic market?
The rainbow graph is the tool through which the evolution of the price of bitcoin (BTC) is observed in the form of a logarithm, making use of the colors of the Rainbow to make it more attractive to the eyes of the investor, making it easier to observe the long-term price movements of BTC.
It was developed based on a blog by a young man named Trolololo in 2014; in this graph, points of information diverge regarding the sales and purchases of bitcoin values.
On the other hand, the graph reflects quite a few essential data, such as the reduction of the annual growth percentage of BTC and the possible prices based on this calculation; it does not mean that this is good or bad; It is just the point of view of the creator of the rainbow graph.
Each color band has a unique and funny name, but behind the seemingly frivolous and entertaining shape of this graphic is something valuable.
Some of the names of the bands are maximum bubble territory, Sell, Really Sell!, Save!, Still cheap, Buy, and Accumulate, among others.
The objective of this graph is to represent, for Bitcoin users and investors in an entertaining way, the most crucial movements that the leading cryptocurrency in the market can develop.
Where red to blue indicates several stages that can be considered diagnoses before a significant investment by users.
They are tools that arise from such an active and innovative market.
Can the Rainbow be an investment method?
It is essential to know that this graph is not an investment method; observing how the BTC market behaves is only informative. Nevertheless, this chart is in the top 5 bullish Bitcoin charts, according to Cointelegraph.
It can be seen that the graph points more and more to the fact that the annual growth percentage is higher, and the more time passes, the more the BTC price will stabilize, avoiding its long-term volatility.
According to this graph, for the years 2019-2020, the BTC should have reached a price according to its logarithmic curve of about USD 41,000/BTC, a value that it got, while between 2020-2021 at about USD 74,000/BTC, perhaps it did not reach its maximum value, however, was close to this reference after having exceeded $60,000 per unit.
At the end of 2021, I estimate a price that would reach USD 127,000/BTC; as we can understand, the BTC prices in this graph will constantly oscillate above or below the logarithmic curve; this value was expected more for 2022 after the development than had during 2021 Bitcoin.
Most of the time, when the bitcoin block production drawdown event happens every four years or so, just a few months before it happens, it’s a great time to buy BTC, and this chart predicts it and tells us. He says in an informative way.
It is important that when starting to make investments in BTC and being able to save and invest more money, we must learn to read the trading charts, making an excellent technical analysis of the operations in a given period.
In addition to knowing the economic indicators that most impact the movements of the BTC.
This type of graph and others can be found in a variety of software that, in many cases, are free and easily found on the internet; the three best platforms, according to “trading guide,” are the following:
- trading view
- crypto trader
- coinmarketcap
On these platforms, you can see several graphs simultaneously, and also, if it is to our liking, we can view the information in addition to the charts.
Conclusion
All these tools are exciting and can be used individually or together, depending on the personality of each investor or trader. Try them; spend time with them to decide which tools meet your expectations.
