Bitcoin Rainbow Chart

The Bitcoin rainbow chart places BTC’s price inside nine colored bands, from “Basically a fire sale” at the bottom to “Maximum bubble territory” at the top, so you can see where today’s price sits relative to its long-run growth trend. The band names are tongue-in-cheek labels for “cheap” and “expensive” compared with that trend. They are not trading signals.

What the Rainbow Chart Measures

Fintrev builds the chart from a log-log regression on Bitcoin’s daily closing prices since 2010. The logarithm of price is fitted against the logarithm of time, which turns Bitcoin’s history of rapid but slowing growth into a roughly straight line. In general form:

log(price) = a + b × log(time)

Here a and b are the fitted constants. The bands are drawn at fixed distances above and below that fitted line. On a log scale, equal distances mean equal percentage gaps, so each band’s upper bound is about 1.65 times its lower bound, whatever the dollar level.

How to Read the Bands

Because the trend line rises over time, every band’s floor and ceiling also rise each day. The price can therefore drift into a lower band without falling, simply by moving sideways while the bands climb.

The colors group into three zones:

• Blue and green (fire sale, BUY!, Accumulate, Still cheap): the price is below or near the lower part of the trend.
• Yellow (HODL!, Is this a bubble?): the price is around the middle of the range.
• Orange and red (FOMO intensifies, Sell. Seriously, SELL!, Maximum bubble territory): the price is far above trend.

Switching between 1Y, 4Y and All changes the time window. The All view shows past cycles moving from the lower bands to the upper ones and back.

What Drives It, and Its Limits

Only two inputs move the chart: the daily closing price and the passage of time. Price sets the position, and time sets where the bands sit. The data refreshes daily.

The model describes the past. It does not forecast the future. A regression fitted to history assumes the same growth pattern will continue, and each new data point can shift the fitted line and every band slightly. Halvings, liquidity, regulation and demand are not inputs, so the chart cannot tell you why the price is high or low. The price can also stay in one band far longer than a reader expects.