Bitcoin Falls Below Rainbow Chart Support, Enters 'Bitcoin Is Dead' Zone

BlockBeats News, June 24th. Bitcoin broke below the valuation model Bitcoin Rainbow Chart's lowest range, marking the second time in history that it has fallen into the purple area labeled "Bitcoin is Dead" in the original model. The Bitcoin Rainbow Chart was developed by Reddit user Azop in 2014, using a logarithmic growth curve to track Bitcoin's long-term price trend and assigning different color ranges to correspond to market sentiment phases.

Some Bitcoin holders believe that the current drop into this area may represent a key buying opportunity, likening it to the scenario in 2022 when Bitcoin dropped to around $15,000 and then formed a cycle bottom. However, analysts have diverging views on this signal. Markus Levin, Co-Founder of XYO, stated that breaking below a range that has been maintained for over a decade implies a structural change in the model. He does not see this as "Bitcoin is Dead" but rather believes that the Rainbow Chart has become ineffective.

Emad Shahin, COO of Ethra, mentioned that the Rainbow Chart is more like a sentiment indicator rather than a predictive tool. Mark Zalan, CEO of GoMining, also noted that the "Bitcoin is Dead" area does not necessarily mean Bitcoin is truly dead. Historically, this area usually represents extreme panic and undervaluation, followed by a recovery.

With institutional investors, ETF flows, derivatives activities, and macro factors playing a larger role in Bitcoin pricing, relying solely on historical valuation models is becoming less effective. Ryan Lee, Chief Analyst at Bitget, stated that the current position of Bitcoin on the Rainbow Chart's lower end indicates weakening market sentiment but does not necessarily mean that a significant new low will occur. If risk aversion further deteriorates, Bitcoin still cannot rule out the possibility of falling to the $50,000 low range.