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

Bitcoin has fallen below the lower range of the long-popular valuation model, the Bitcoin Rainbow Chart, marking only the second time in history it has dipped into the purple zone labeled "Bitcoin is Dead" in the original framework. Developed by Reddit user Azop in 2014, the Bitcoin Rainbow Chart uses logarithmic growth curves to track Bitcoin’s long-term price trends, with distinct color zones corresponding to different market sentiment phases. Some Bitcoin holders view the current plunge into this zone as a key buying opportunity, drawing parallels to Bitcoin’s 2022 drop to around $15,000, which later formed the cycle’s bottom. However, analysts are divided on this signal. Markus Levin, co-founder of XYO, said the price’s first break below a range that has held for over a decade signals a structural shift in the model. He does not believe this means Bitcoin is dead; instead, he argues the Rainbow Chart has become invalid. Emad Shahin, COO of Ethra, noted that the Rainbow Chart acts more as a sentiment indicator than a predictive tool. Mark Zalan, CEO of GoMining, added that the "Bitcoin is Dead" zone does not actually mean Bitcoin is defunct—historically, it typically reflects extreme panic and undervaluation, often followed by a recovery. As institutional investors, ETF flows, derivatives activity, and macro factors carry increasing weight in Bitcoin pricing, the validity of relying solely on historical valuation models is waning. Lee stated that Bitcoin’s current position at the Rainbow Chart’s lower levels points to weak market sentiment, but does not guarantee another sharp new low. If risk appetite deteriorates further, Bitcoin still cannot rule out a drop to the $50,000 range.