Originally published at satoshimacro.com.
The Rainbow Chart gets dismissed as a meme, and the colour bands invite that. But underneath the joke labels sits a nine-band logarithmic regression, which makes it a close cousin of the Bitcoin Power Law - the same idea that Bitcoin's price history fits a straight line on a log-log chart, just rendered as coloured valuation zones instead of a single regression line with standard-deviation channels.
Reading it is simple: the higher the band, the more stretched the price is against its long-run growth path. The red Maximum Bubble Territory band has coincided with every major cycle top - December 2013, December 2017, April 2021, and the late-2025 peak. The dark blue bands at the bottom marked the January 2015, December 2018 and November 2022 lows. That is a decade of cycle inflections landing where the bands say excess and value should sit.
Two honest limitations. First, band drift: the regression is refit as history accumulates, so the exact band edges move over time, which means historical readings are cleaner than live ones. Second, and this applies to the Power Law too, it is descriptive, not predictive - a statistical fit to past growth, not a law of nature. Nothing forces the next cycle to respect a curve fitted to the previous ones.
That is exactly why I use it as a secondary visual inside the SatoshiMacro Model rather than a standalone signal - one voice in the Tier 1 Valuation panel alongside the Power Law deviation, MVRV Z-Score and Mayer Multiple. When the loud colourful chart and the sober quantitative ones agree, that agreement is the signal.
For Australian holders there is a practical overlay: the lower bands historically mark the accumulation phases where the 12-month CGT discount clock matters most, because those are the parcels you intend to hold past the threshold.
The free interactive chart, updated daily in AUD and USD: https://satoshimacro.com/tools/crypto/cycle-indicators/bitcoin-rainbow-chart/
Disclosure: I built and maintain SatoshiMacro. The model is free and ad-supported (broker affiliate links on the main site, not in this post). This post is editorial, not financial advice.
