Rainbow Chart is a log regression on price and time, colored into named bands from "fire sale" at the bottom to "maximum bubble territory" at the top. Its own creator has called it a meme with no scientific basis — and when Bitcoin's price broke below every band in 2022, the bands got redrawn. That single fact is the clearest example anywhere on this site of why a model that gets rewritten after a miss can't be trusted as a forecast, however good it looks in hindsight.
How the bands are drawn
Rainbow Chart takes the same log regression approach as Power Law — fitting price against time on a log-log basis — and then colors fixed multiples above and below the central fit line into named bands, from "fire sale" (well below the line) up through "maximum bubble territory" (well above it). The band boundaries and their colorful names are a presentation layer on top of an ordinary curve fit.
What its creator has said
The chart's original creator has publicly described it as a meme with no scientific basis — a piece of internet culture that happened to visually resemble a serious model, without any claim to predictive validity behind it. That's a rare and useful admission in a space full of confidently-presented price models.
The 2022 redraw
When Bitcoin's price fell below every colored band (including "fire sale," the bottom-most zone) during the 2022 bear market, the chart's bands were subsequently redrawn to accommodate the new lower range. A model whose failure gets absorbed by redrawing its own boundaries can never actually be wrong — which is exactly why it can't function as a genuine forecast, however visually appealing the result looks.
How this site displays it differently
This site's Rainbow Chart page doesn't just show one "current" fit and quietly update it later. It displays a 2021-vintage fit alongside today's live-refit version on the same chart, so the redraw itself stays visible as history, not something quietly erased and replaced.