What is the Bitcoin Rainbow Chart?
The Bitcoin Rainbow Chart is a long-term visualization tool that divides Bitcoin’s price into color-coded bands. The rainbow colors indicate whether Bitcoin has historically traded in a relatively undervalued range (cool colors) or overvalued range (warm colors). “Under-” or “overvalued” here is relative to the regression curve, not a statement about fundamental fair value.
Overview of the color bands
| Color | Zone | Meaning |
|---|---|---|
| Dark red | Bubble | Extremely overvalued, historical peak zone |
| Light red | Sell | Strongly overvalued |
| Orange | FOMO | Likely overvalued, caution |
| Light orange | Bubble? | Possibly overvalued |
| Yellow | Hold | Historically neutral, close to the regression line |
| Light green | Cheap | Slightly undervalued |
| Green | Accumulate | Undervalued, historically attractive zone |
| Teal | Buy | Strongly undervalued |
| Blue | Fire sale | Extremely undervalued, historically rare zone |
How does the Bitcoin Rainbow Chart work?
Calculation
The chart is based on a logarithmic regression curve:
Historical data: The full Bitcoin price history since 2010 is analyzed
Log scale: It focuses on relative moves (for example, doublings) instead of absolute dollar changes
Regression curve: A logarithmic regression curve is fitted to historical price data (best fit)
Color bands: Fixed distances above and below the regression line form nine valuation zones
Why logarithmic? Bitcoin rose from under $1 to above $100,000. On a linear scale, early price moves would be barely visible. A log scale highlights relative changes and works better for long-term trends.
Limitations
The Bitcoin Rainbow Chart is a helpful visualization tool, but it is not an oracle:
Backward-looking: It is built on historical data. Different versions exist, and some have been adjusted over time.
No guarantees: Past patterns do not have to repeat. Black-swan events like the COVID crash in 2020 or the FTX collapse in 2022 pushed Bitcoin below the lowest band at times.
Subjective parameters: Band widths and positioning are not scientifically fixed. Different versions use slightly different formulas and band settings.
Long-term focus: The chart is not designed for short-term trading decisions.
For context, it is best viewed alongside other indicators such as the Fear and Greed Index, on-chain data, or Bitcoin dominance.
History of the Rainbow Chart
The Bitcoin Rainbow Chart started as a community project around 2014:
Version 1 (2014): Early versions emerged from the Bitcointalk and Reddit community. A logarithmic regression curve came first, and the rainbow-style bands were added later. It began as a meme-style visualization.
Version 2 (2019): The formula was revisited and updated by the analyst “Rohmeo” (blockchaincenter.net) to better fit newer price data. Many websites still use this version, or close variants of it.
Updates (2022/2023): After the 2022 bear market, the chart was adjusted again because Bitcoin temporarily fell below the lowest band.
Important note: The Rainbow Chart is a meme-style chart. It is a simplified visualization of historical price data. It should not be interpreted as investment advice or as a buy or sell signal.
Bitcoin Rainbow Chart and halving cycles
An interesting historical pattern is that around halving events, Bitcoin often trades in the lower bands. In the months that follow, it can move into the higher bands.
| Halving | Date | Zone before halving | Zone 12 to 24 months after (typical) |
|---|---|---|---|
| 1st halving | November 2012 | Buy/Accumulate | Sell/Bubble (2013) |
| 2nd halving | July 2016 | Accumulate/Cheap | Sell/Bubble (2017) |
| 3rd halving | May 2020 | Cheap/Hold | Sell/Bubble (2021) |
| 4th halving | April 2024 | Accumulate/Cheap | No extreme like prior cycles so far (as of Feb 2026) |
Whether the post-halving move into the upper bands will still play out after the 4th halving, or whether cycles are structurally changing, remains to be seen.
About the author
Hi, I'm Philipp. 👋
Founder coinbird.com
With over 15 years of experience in the IT sector, I love building easy-to-use digital products that actually help people. In 2017, I fell down the Bitcoin rabbit hole and gradually realized that the crypto world lacked simple, user-friendly tools for everyday people. That’s why I created coinbird.com – to make crypto easier to understand, more accessible, and transparent.
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