The colorful rainbow colors chart was first introduced back in 2014 by a Reddit user ‘azop‘. The creator’s intention was simply just for fun and to benefit the fellow Bitcoin investors community in r/BitcoinMarkets with a little update here and there once in a while. With its unique colors and surprisingly high accuracy, the chart has gotten the nickname “Bitcoin Rainbow Chart.”
The chart follows a logarithmic regression introduced by Bitcointalk user ‘trolololo‘ back in 2014. The rainbow chart simplified and divided each regression trend into different colors with easy to understand captions such as Red means ‘to sell’ and Blue means ‘to buy.’
Later on, a Bitcoin enthusiast Über Holger has made an improvement on the chart, while further clarify each color’s meaning as well as adding halving periods into the calculation.
Image Courtesy: https://www.blockchaincenter.net/bitcoin-rainbow-chart/
At the time of writing, according to the Rainbow Chart, Bitcoin price is leaving Dark Blue ‘Basically a Fire Sale’ territory and entering ‘BUY!’ territory. However, the creator have noted that this chart is only meant to be a fun way of looking at a long term price movement, and by no mean that this chart can predict the future. He also added this basically means “it will only be correct until it isn’t.”
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