Bitcoin Rainbow Chart
The Rainbow Chart is one of the most-shared long-term Bitcoin valuation visuals. It fits a logarithmic regression to BTC's price history and stacks colored sentiment bands above and below it. It's a coarse, long-horizon framing tool — not a market timer.
The 9 sentiment bands
From cycle bottoms (bottom) to cycle tops (top).
- Maximum Bubble TerritoryCycle top — euphoria, blow-off conditions
- Sell. Seriously, SELL!Distribution zone — extreme overheating
- FOMO IntensifiesLate-stage bull market
- Is This A Bubble?Mid-bull market
- HODL!Fair value zone
- Still CheapBelow trend, accumulation friendly
- AccumulateDiscount zone
- BuyStrong accumulation zone
- Fire SaleCycle bottom — capitulation
How the regression works
The chart fits a logarithmic curve of the form price ≈ a · ln(days)^b + c to Bitcoin's full price history. The fit produces a long-term central trend line. Bands of fixed width are then drawn above and below that line and colored from blue (deep discount) to violet (extreme overvaluation).
Because the regression is recalibrated as new data arrives, the bands shift slightly over time. The chart works best on a logarithmic Y-axis — on a linear axis it's almost unreadable.
How to read it
- Treat the bands as multi-month sentiment zones, not entry/exit signals.
- The bottom three bands (blue) have historically been generational accumulation zones.
- The top two bands (red/violet) have historically marked cycle distribution.
- Bitcoin can spend many months inside any single band — don't bet against the trend on band color alone.
- Combine with on-chain indicators like CBBI, MVRV and the Pi Cycle Top.
Limitations to keep in mind
The Rainbow Chart is a simple curve fit on a 16-year dataset spanning four cycles. It assumes price will continue along a similar logarithmic trajectory. If Bitcoin's growth pattern flattens (as some analysts expect at higher market caps), the upper bands will systematically over-estimate "fair value". Use it as one input — not a thesis.