BlockBeats report, June 24: Bitcoin fell below the lowest range of the Bitcoin Rainbow Chart valuation model, marking only the second time in history it has entered the purple zone labeled "Bitcoin is dead" in the original model. The Bitcoin Rainbow Chart was developed in 2014 by Reddit user Azop, using a logarithmic growth curve to track Bitcoin’s long-term price trends, with different color zones representing stages of market sentiment.
Some Bitcoin holders believe that the current drop into this zone may represent a key buying opportunity, drawing parallels to 2022 when Bitcoin fell near $15,000 before forming a cycle low. However, analysts are divided on the significance of this signal. Markus Levin, co-founder of XYO, stated that the price breaking below a range that had held for over a decade indicates a structural shift in the model; he does not view this as Bitcoin being dead, but rather as the Rainbow Chart having become obsolete.
Ethra COO Emad Shahin stated that the Rainbow Chart is more of an emotional indicator than a predictive tool. GoMining CEO Mark Zalan also noted that the "Bitcoin is dead" region does not mean Bitcoin has actually died; historically, this area typically represents extreme fear and undervaluation, often followed by a recovery.
As institutional investors, ETF cash flows, derivatives activity, and macroeconomic factors play an increasingly dominant role in Bitcoin pricing, the effectiveness of relying solely on historical valuation models is declining. Lee notes that Bitcoin’s current position at the lower end of the rainbow chart indicates weakening market sentiment, but this does not necessarily mean a significant new low is inevitable; if risk appetite further deteriorates, Bitcoin cannot be ruled out from falling toward the $50,000 lower range.