Rainbow Chart Signals Extreme Discount for Bitcoin

Bitcoin's price has plummeted to its lowest valuation region on the Rainbow Chart model, which tracks long-term price trends. The volatility-adjusted Z-score has also dropped to its lowest level in the last decade, reaching -2.293.

CryptoQuant analyst Axel Adler Jr. notes that Bitcoin is trading at a 'panic selling price' according to the Rainbow Chart pattern. This indicates an extreme discount compared to the long-term price trajectory of the pattern.

The Rainbow Chart model not only measures the decline in Bitcoin's price but also compares it to the long-term historical trend, showing the extent to which the market has deviated from that trend. According to Adler Jr., the current downward divergence surpasses the level seen at the bottom of the previous bear market.

However, a low valuation does not definitively confirm that the final bottom has been reached. Confirmation from other indicators is needed before it can be said that the market has reversed direction.