🌈 1. The BTC rainbow chart is what

🌈 1. What is the BTC Rainbow Chart?

BTC Rainbow Chart is a valuation visualization tool based on the long-term logarithmic price trend of Bitcoin, combined with the regression bandwidth of multiple historical cycles.

It divides the price range of BTC into several color bands, representing different market states and sentiments, for example:

• 🔵 Blue Band: Extremely Undervalued / Bottom Fishing Opportunity (Fire Sale)
• 🟢 Green Band: Reasonable Valuation / Accumulation Zone
• 🟡 Yellow Band: Overheated Frontier / Be Cautious of FOMO
• 🔴 Red Band: Bubble Stage / Extremely Overvalued (Bubble)

📍 Current Position of BTC in the Rainbow Chart (July 2025)

Currently, the BTC price is in the $115,000–$116,000 range, according to the latest data from the rainbow chart:

• Currently in the “Yellow - Orange Zone”, roughly corresponding to the historical "Optimistic/Cautious FOMO Zone (Is this a bubble?);
• This is a mid-to-late stage of a bull market, which usually means that prices are in a strong phase, but there is still room before the actual bubble peak.

📌 Years corresponding to similar stages in history:

• In mid-2017, BTC was in this range from $3K to $6K, and then entered the final peak;
• From November 2020 to January 2021, BTC traded in the range of $17K to $34K, then accelerated to $64K.

❓ Will BTC drop below $50,000 in the future?

Theoretically: it’s not impossible, but the probability is extremely low.

For BTC to drop below $50,000, the following extreme scenarios need to be met:

1. Global systemic financial crisis, such as the collapse of the US dollar and the bursting of large technology bubbles;
2. Severe policy repression, such as the simultaneous prohibition of Bitcoin circulation and mining by major countries worldwide;
3. On-chain security or technological trust crisis (e.g., serious bugs, fork failures);

However, based on the current macro and on-chain data, the logic for long-term large capital allocation in BTC is strengthening:

• US spot ETF approved, institutions are systematically increasing their holdings;
• Sovereign nations are gradually viewing BTC as a strategic reserve (such as El Salvador, Argentina);
• BTC has gone through multiple rounds of significant declines, with on-chain addresses, activity levels, and the number of holding users reaching new highs.

📌 Conclusion: Unless there is an extreme black swan event, the possibility of BTC dropping below $50,000 is <10%

🚀 The possibility of BTC hitting $200,000

This issue needs to be considered in conjunction with the cycle and macroeconomics:

✅ The logic supporting BTC reaching $200K:

1. Supply and Demand Model: Halving + ETF Buying = Supply Continues to Tighten;
2. S2F Model (Scarcity): Predicts a peak of $250K–$288K;
3. Globalization Trend of Bitcoin Market Capitalization:
   • Current market cap ≈ $2.2T, if BTC reaches $200K, the corresponding market cap will be about $4T;
   • This only requires the allocation of 3–4% of global wealth (100T level), which is not unrealistic.

📉 The risk lies in:

• Market speculation anticipates future price increases;
• Changes in Federal Reserve policy may introduce new technologies that replace the BTC narrative;
• On-chain transaction fees or scalability issues affect mainstream adoption.

📌 Conclusion: The probability of BTC challenging $200K in the next 2–3 years is moderate to high (about 50–60%), but the path will not be linear, and there will still be a 30–40% risk of a pullback.

Summary