The BTC Rainbow Chart was developed using a logarithmic regression model to track Bitcoin’s long-term price trends. This model was chosen because Bitcoin’s price history follows an exponential growth pattern rather than a linear one. The chart was first introduced by copyright analysts and enthusiasts who noticed that Bitcoin’s price cycles tend to follow a predictable curve, with periods of extreme highs and lows.

To make this data more accessible and visually intuitive, the BTC Rainbow Chart was created with color-coded bands that represent different valuation zones. These bands are not based on any specific financial indicators but rather serve as a simplified way to understand Bitcoin’s price history. Over time, the chart has gained popularity among investors and traders as a long-term valuation tool.

Despite its widespread use, it’s important to remember that the BTC Rainbow Chart is not a scientific prediction model but a historical reference tool. It does not account for future regulatory changes, market sentiment shifts, or external economic factors. To dive deeper into the methodology and significance of this chart, check out the full explanation in the BTC Rainbow guide.