Bitcoin has fallen to its lowest valuation region on the Rainbow Chart model, which is based on long-term price trends. Its volatility-adjusted Z-score has also dropped to its lowest level in the last 10 years.
CryptoQuant analyst Axel Adler Jr. stated that Bitcoin is trading in a region that could be described as a “panic selling price” on the Rainbow Chart pattern. According to the analyst, the current price indicates an extreme discount compared to the long-term price trajectory of the pattern.
The Rainbow Chart doesn’t just measure the decline in Bitcoin’s price. The model compares the current price to the long-term historical trend, showing the extent to which the market has deviated from that trend.
According to the data, the volatility-adjusted Z-Score dropped to -2.293. This level is the lowest recorded for the indicator since 2016. The indicator was at -1.979 at the bottom of the 2022 bear market.
The indicator, which takes into account volatility changes in different market cycles, suggests that Bitcoin’s current downward divergence has surpassed the level seen at the bottom of the previous bear market, according to the analyst.
However, the extremely low valuation does not definitively confirm that the final bottom has been reached. While the current outlook points to a potentially attractive price range within the model, confirmation from other indicators is needed before it can be said that the market has reversed direction.
