Bitcoin is now trading in the lowest band of the rainbow chart model, a level CryptoQuant analyst Axel Adler Jr. described as "basically on sale," according to a post cited by BlockBeats on Aug. 15. The call is not simply about how far Bitcoin has dropped in price. Instead, the model compares the asset’s current market price with its long-term trajectory, using the gap to measure how far the market has moved away from its historical trend.
Adler said the volatility-adjusted Z-Score currently stands at -2.293, the lowest reading since 2016 and below the -1.979 recorded at the 2022 bear-market bottom. Because the metric accounts for differences in volatility across market cycles, he argued that Bitcoin’s current downside deviation from the model has already exceeded the trough seen in the previous bear market.
At the same time, Adler cautioned that the reading does not confirm a final bottom. In his view, the data points to a deeply undervalued zone within the model, potentially an attractive area, while any market reversal would still need separate confirmation.
Bitcoin is trading in the lowest range of the rainbow chart model, a level described as "basically on sale," CryptoQuant analyst Axel Adler Jr. said in a post cited by BlockBeats on Aug. 15.
Adler said the current price sits at an extreme discount relative to the model’s long-term trajectory. He added that the point is not simply how much Bitcoin has fallen. The rainbow chart compares Bitcoin’s current market price with its long-term path, so the gap shows how far the market has deviated from its historical trend.
The volatility-adjusted Z-Score now stands at -2.293. That is the lowest reading since 2016, and it is also below the -1.979 seen at the 2022 bear-market bottom.
According to Adler, the metric accounts for differences in volatility across market cycles. On that basis, the current downside deviation from the model is deeper than the deviation recorded at the bottom of the previous bear market.
He also said the signal should not be treated as confirmation of a final bottom. In his view, Bitcoin is in an extreme discount zone and the volatility-adjusted Z-Score has fallen to a 10-year low, which shows the degree of undervaluation within the model. A very low valuation may point to a potentially attractive area, but any market reversal still requires separate confirmation.
Note: Z-Score is a common standardized statistical measure used to show how far a data point is from the mean, expressed in standard deviations.
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