Crypto glossary
Bitcoin rainbow chart
The bitcoin rainbow chart plots bitcoin's price on a log scale over coloured bands from a long-term regression, marking cheap and overheated zones.
The chart fits a logarithmic regression curve to bitcoin's price history and draws a series of coloured bands around it, from blue and green at the bottom, labelled with phrases like fire sale or accumulate, to orange and red at the top, labelled with phrases like FOMO intensifies or maximum bubble territory. Where the current price sits within the rainbow is meant to show whether bitcoin is historically cheap or expensive.
It started as an internet meme around 2014 and became one of the most shared bitcoin charts during bull markets, appearing on websites, social media and calculators. Its appeal is simplicity: it gives a long-term picture that ignores day-to-day noise and suggests a slowly rising fair value.
The chart has no predictive model behind it beyond a curve fitted to past data. When bitcoin broke below its lowest band in 2022, the creators adjusted the bands, which illustrates the problem: the regression can be refitted after the fact. It says nothing about fundamentals, demand or timing, and its creators describe it as a fun way to look at long-term movements rather than investment advice.
Example
During a deep bear market, a holder checks the rainbow chart and sees price in the blue buy band, which encourages them to keep dollar-cost averaging, while acknowledging the bands have been redrawn before.