Bitcoin falls below the bottom of the Rainbow Chart, entering the "Bitcoin is Dead" zone

BlockBeats reported on June 24 that Bitcoin has fallen below the lowest band of the Bitcoin Rainbow Chart valuation model, marking only the second time in history it has entered the purple “Bitcoin Is Dead” zone of the original model. The Bitcoin Rainbow Chart was developed by Reddit user Azop in 2014 and uses a logarithmic growth curve to track Bitcoin’s long-term price trends, with different colored bands corresponding to different market sentiment stages.

Some Bitcoin holders believe that the current move into this zone could represent a key buying opportunity, drawing parallels with Bitcoin falling to around $15,000 in 2022 and subsequently forming a cycle bottom. However, analysts are divided on this signal. XYO co-founder Markus Levin said that the price breaking below a range that has held for more than a decade suggests a structural change in the model. He does not believe this means Bitcoin is dead, but rather that the Rainbow Chart has lost its validity.

Ethra COO Emad Shahin stated that the Rainbow Chart is more of a sentiment indicator than a predictive tool. GoMining CEO Mark Zalan also commented that the “Bitcoin Is Dead” zone does not actually mean Bitcoin is dead; historically, it typically reflects extreme panic and undervaluation, often followed by recovery.

As institutional investors, ETF fund flows, derivatives activity, and macroeconomic factors play an increasingly significant role in Bitcoin pricing, solely relying on historical valuation models is becoming less effective. Lee noted that with Bitcoin currently near the bottom of the Rainbow Chart, market sentiment is weakening, but this does not necessarily mean new major lows are imminent; if risk appetite worsens further, Bitcoin cannot be ruled out from falling to the $50,000 lower band.