The Rainbow Chart places Bitcoin price inside long-term logarithmic bands. Lower bands indicate historically cooler valuation and upper bands indicate hotter valuation. The model is descriptive, changes with methodology and cannot guarantee support, resistance or future returns.
Transparent formula
Band position = current price relative to a logarithmic regression curve and its configured offsets
Worked example
If price sits in a lower band, the chart says valuation is cooler relative to its own history. It does not say price cannot fall further. Confirm with drawdown, realized price, liquidity and trend.
Use this sequence
- Identify the current band and date.
- Compare with historical percentile, not color alone.
- Check independent valuation and trend charts.
- Define what would invalidate the view.
Common mistakes
- Treating a color band as guaranteed support.
- Comparing charts built with different formulas as identical.
- Using a long-term model for short-term timing.
Verify next
Frequently asked questions
Is the Rainbow Chart predictive?
It provides historical valuation context, not a precise forecast.
Why do different Rainbow Charts disagree?
They may use different regression periods, offsets, supply assumptions and recalibration rules.
Which chart should be checked next?
Use MVRV Z-Score, realized price, 200-week MA and drawdown for independent confirmation.
This page provides calculation and research frameworks, not investment, legal or tax advice.
