Bitcoin, after falling nearly 50% from its October 2025 record high of $126,000, the world's largest cryptocurrency is now trading around $62,500, placing it below the lowest band of the widely followed Bitcoin Rainbow Chart.
The move has pushed the cryptocurrency into the chart's infamous purple "Bitcoin Is Dead" zone, a level that has only been breached once before, during the depths of the 2022 bear market.
Photo Credit: The Original Rainbow Chart
This zone has historically represented extreme pessimism — and, in hindsight, some of Bitcoin's best long-term buying opportunities. But this time, the chatter is also about whether one of crypto's oldest valuation models has finally outlived its usefulness.
What Is the Bitcoin Rainbow Chart?
The Bitcoin Rainbow Chart first appeared in 2014, created by Reddit user Azop as a simple visual representation of Bitcoin's long-term price history. Unlike traditional valuation models, it doesn't attempt to calculate Bitcoin's intrinsic value. Instead, it overlays a logarithmic regression curve on Bitcoin's historical prices and divides it into coloured bands representing different market sentiments.
The lower bands — from "Fire Sale" to "Bitcoin Is Dead" — have traditionally indicated periods of deep pessimism, while the upper red bands have been associated with euphoric bull-market peaks.
The Creator Never Intended It To Be Scientific
The chart's creator has long cautioned against taking it too seriously. On the official Bitcoin Rainbow Chart website, the creator describes the indicator as "a meme, a joke" rather than a rigorous forecasting tool.
Following Bitcoin's collapse below the chart during the 2022 bear market, the creator even published a blog titled "The Rainbow Chart is dead – long live the Rainbow Chart." Instead of abandoning the indicator entirely, the model was recalibrated using nearly a decade of additional price data.
The updated Version 2 retained the familiar rainbow colours but introduced a new logarithmic curve that better reflected Bitcoin's slowing long-term growth. Today, Bitcoin has fallen below even that revised model.
Chatter Amid The Crypto Community
Some investors see history repeating itself. Popular crypto commentator CryptoRover wrote on X that Bitcoin last entered this zone in late 2022, shortly before beginning the bull market that eventually carried it to fresh all-time highs. Others believe the move says less about Bitcoin and more about the limitations of historical models.
Speaking to CoinDesk, Markus Levin, co-founder of blockchain platform XYO, argued that the breach signals "a structural shift in the model" rather than in Bitcoin itself. "I do not read this as Bitcoin being dead," Levin said. "I read it as the Rainbow Chart being dead, and that is actually a bullish statement about how far the asset has matured."
Ryan Lee, Chief Analyst at crypto exchange Bitget, also speaking to CoinDesk, said the Rainbow Chart remains a useful tool for visualising long-term market cycles but should never be viewed as a predictive model because today's Bitcoin market is increasingly influenced by institutional investors, spot ETFs, macroeconomic conditions and global liquidity.
Not the First Bitcoin Model to Fail(?)
The Rainbow Chart isn't the first celebrated Bitcoin indicator to come under scrutiny. The Stock-to-Flow (S2F) model, introduced by pseudonymous analyst PlanB in 2019, became famous for linking Bitcoin's price to its declining supply after each halving event. It projected prices far above current levels following the 2024 halving, with forecasts approaching $500,000.
Instead, Bitcoin peaked at roughly $126,000 before retreating sharply, leading many analysts to conclude that the model had broken down.
The Rainbow Chart's creator has openly criticised Stock-to-Flow on the project's website, arguing that while the Rainbow Chart was always intended as a humorous visualisation, Stock-to-Flow was marketed as a statistically robust valuation framework despite ignoring the role of demand in determining Bitcoin's price.
Now, Bitcoin is clearly not "dead." Institutional adoption continues to grow, spot Bitcoin ETFs have reshaped the investor base, and macroeconomic factors increasingly drive price action. At the same time, these very developments may also explain why models built almost entirely on Bitcoin's early historical price behaviour are beginning to show their age.
CoinSwitch's Markets Desk says, "The slide below $60K reflects current market conditions of spot BTC ETF outflows, the Fed's hawkish stance, and a strengthening U.S. dollar. On the chart, liquidity at $61,800–62,000 acts as a magnet, if momentum holds, price could be drawn there as shorts get squeezed, though that same cluster may cap the bounce as resistance. Should support fail, $55K remains a plausible cycle low. With macro headwinds and concentrated leverage in play, investors should treat risk management as the top priority rather than chasing direction."
The next cycle will determine whether the Rainbow Chart simply needs a relook — or whether we're already on the other side of the rainbow.
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