Bitcoin Rainbow Chart
The Bitcoin Rainbow Chart is a chart of the bitcoin price on a logarithmic scale with nine coloured bands around a long-term growth curve. The colour the price sits in shows how far it is from the long-term trend: blue means "cheap", red means "expensive". It predicts nothing; it is a tool for looking at the history without the daily noise.
How did the rainbow chart come about?
The first rainbow was drawn in 2014 by Reddit user "azop" as a straight line meant to lift spirits during a bear market. In 2019 the website blockchaincenter.net combined it with a logarithmic regression by Bitcointalk forum user "trolololo". That produced the characteristic arc. After the 2022 crash the price fell below the entire rainbow and the author revised the chart: version 2 (November 2022) used newer data, and today's dynamic version fits a power-law curve to the entire price history since 2012 and is recalculated every day.
What do the coloured bands mean?
| Band (name on the chart) | Meaning | Colour |
|---|---|---|
| Maximum Bubble Territory | peak bubble | dark red |
| Sell. Seriously, SELL! | sell | red |
| FOMO intensifies | growing fear of missing out | dark orange |
| Is this a bubble? | could this be a bubble? | orange |
| HODL! | hold – middle of the model | yellow |
| Still cheap | still cheap | light green |
| Accumulate | accumulate | green |
| BUY! | buy | light blue |
| Basically a Fire Sale | fire sale | blue |
In the dynamic version each band is 30% higher than the one below it. The whole rainbow therefore spans from roughly a third of the model's midline to three times it. The band boundaries move up every day, because the model assumes long-term price growth.
How do you read the rainbow chart?
- Find which colour today's price is in.
- Look at where the price was at past peaks and bottoms. The bottoms have always been in the lower bands or below the rainbow.
- Treat the band as one perspective, not as a buy signal. Network difficulty, the halving and your electricity price matter too.
What are the weaknesses of the rainbow chart?
- It has no scientific basis. The author himself describes it as a fun way of looking at price history.
- The curve is fitted retrospectively to history. When the market changes, the bands shift or the price drops out of the rainbow (March 2020, 2022).
- Peaks are lower each cycle, so in recent years the price has not reached the upper, red bands.
Where bitcoin sits in the rainbow today and what history suggests for buying ASIC miners is discussed in the article Bitcoin Rainbow Chart: the price is in the lowest band.
Sources
Frequently asked questions
Who invented the Bitcoin Rainbow Chart?
Can the rainbow chart predict the price?
Why do the rainbow chart bands change?
This text was prepared with the help of AI. Facts, figures and procedures were checked by Yegor.
