Bitcoin has fallen into the "Dead" zone of the Rainbow Chart, and the market is asking the same question: Is this valuation model, which has been used for 12 years, still effective?

The Rainbow Chart divides prices into colored bands, with the lowest purple zone marked as "Bitcoin is dead." Historically, it has only entered this zone twice, the last time being at the end of 2022, which was followed by the cycle bottom. But this time, analysts are arguing.
XYO co-founder Markus Levin directly stated that the model has become invalid. The reason is quite solid: when the Rainbow Chart was designed, Bitcoin only had retail investors and a very small number of institutions. Now, ETF fund flows, macro interest rates, and geopolitical risks are all factored into pricing. A static model based on a logarithmic growth curve can hardly capture these new variables.
Opponents, however, believe that the model reflects a long-term mean reversion logic, and the extreme fear zone itself is a buy signal. But the problem is: at the bottom of 2022, on-chain structures (such as long-term holder selling pressure and miner profitability) bottomed out in sync with price; currently, on-chain activity is sluggish, and ETF outflows continue. The position given by the Rainbow Chart is more of an emotional anchor than a fundamental turning point.
A deeper change is that Bitcoin's market structure is shifting from "cycle-driven" to "macro + institution-driven." The influence of the four-year halving narrative is declining, while the weight of variables such as Federal Reserve policy, AI capital diversion, and regulatory progress is increasing. If the model only focuses on the relationship between price and time, ignoring capital flows and on-chain behavior, its predictive value will be discounted.
For traders, the "Dead" zone of the Rainbow Chart can serve as an extreme sentiment reference, but using it to bottom-fish requires more verification. Real bottom signals often come from the resonance of on-chain data (such as short-term holder cost basis and miner capitulation levels) with the macro environment, rather than the color of a single-variable model.
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