Bitcoin Rainbow Chart
A long-term valuation tool for Bitcoin using logarithmic growth curves.
What is the Bitcoin Rainbow Chart?
The Bitcoin Rainbow Chart is a long-term valuation tool for Bitcoin. It uses a logarithmic regression curve to outline the price of Bitcoin over time. The different color bands represent different market sentiments, from "Fire Sale" to "Maximum Bubble Territory."
Purpose
Designed to help investors ignore short-term volatility and focus on long-term market cycles.
The Math
It's based on logarithmic regression, which accounts for Bitcoin's diminishing returns market matures.
How to Read the Chart
- Maximum Bubble Territory: Extreme greed, historically the time to take profits.
- FOMO Intensifies: Market is heating up rapidly.
- HODL!: Neutral territory, the heart of the cycle.
- Accumulate: Price is attractive for long-term positions.
- Basically a Fire Sale: Historical bottoming zones.