by Coinstrooper Crypto Articles
Quick Take
  • Statistician George Box once wrote, “All models are wrong, but some are useful.” Stock-to-flow has already crossed from useful to broken.
  • The question now is whether the rainbow chart is heading the same way.
  • The rainbow chart plots Bitcoin’s price against a logarithmic regression band.
  • Red euphoria sits at the top, and deep value sits at the bottom.

What Happened

The pseudonymous analyst PlanB introduced the stock-to-flow scarcity model in 2019. It tied Bitcoin’s price to its shrinking supply, with issuance halving after each halving.

Market Context

The rainbow chart plots Bitcoin’s price against a logarithmic regression band. Each colored band marks a sentiment zone. Red euphoria sits at the top, and deep value sits at the bottom.

Today, Bitcoin sits below even that floor. Its live market price of about $62,500 has dropped through the “Fire sale!” band, outside the model’s defined range.

That has happened only once before, near the 2022 bear-market low. By one reading, the breach frames the current level as a rare deep-value entry point.

For years, the fit looked convincing. Price oscillated around the model line through 2013, 2017, and 2021, which lent the framework real credibility.

PlanB pushed the projection further. He has suggested Bitcoin could near $5 million by the 2028 halving, a figure the current price makes hard to defend.

Critics point to a deeper flaw. The model tracks supply alone and ignores demand, the force that actually moves price during real market stress.

The stock-to-flow deflection chart measures price divided by the model’s value. For years, that ratio reverted toward one. Now it is collapsing toward zero.

So price keeps undershooting the upper bands while now breaking the lower one. The band structure that once contained Bitcoin no longer holds it on either side.

Why It Matters

The original version contains 10 bands. At its lowest, a purple strip carries the grim label “Bitcoin is dead.” Sliding into it has always signaled extreme pessimism.

A deep-value reading assumes the model still works. Stock-to-flow shows why that assumption carries real risk.

Details

Bitcoin (BTC) has slipped below the lowest band of the Bitcoin rainbow chart, the zone the original model bluntly labeled “Bitcoin is dead.” The asset now trades near $62,500, roughly half its October record.

Statistician George Box once wrote, “All models are wrong, but some are useful.” Stock-to-flow has already crossed from useful to broken. The question now is whether the rainbow chart is heading the same way.

Understanding Bitcoin’s Rainbow Chart

A Reddit user first sketched the chart in 2014. A Bitcointalk contributor later paired it with logarithmic regression, which gave the bands their familiar shape.

For most of Bitcoin’s history, the gauge worked. Tops landed in the warm red bands, and bottoms landed in the cool blue and purple zones.

An updated version of Coinglass trims the model to nine bands. It drops the purple floor entirely, leaving “Fire sale!” as the bottom zone. Our explainer on the rainbow chart band model covers how these bands are built.

Stock-to-Flow Already Died

Then it broke. After the 2024 halving, the model demanded roughly $500,000. Bitcoin instead peaked near $126,000 in October 2025, missing the target by about 75%.

A ratio grinding to zero means the error no longer corrects itself. The model now predicts a number that reality keeps ignoring, cycle after cycle.

George Box anticipated this outcome. A model can accurately describe the past and still fail to predict the future. Stock-to-flow has moved firmly into the wrong column.

Will the Bitcoin Rainbow Chart Follow?

The rainbow chart shows early symptoms of the same illness. Its weakness appears at both ends of the range, not just the floor. Past peaks in 2013, 2017, and 2021 pushed into the red “sell” bands near the top.

This cycle’s high reached only the green “Accumulate” zone, far below previous levels.