Rainbow Price Chart

This indicator is a technical and on-chain analysis tool for Bitcoin, designed to help investors better understand the different phases of the market cycle and underlying sentiment. It directly overlays on the price chart (overlay=true).

Indicator Name: "Rainbow Price Chart & V/T Ratio Signals"

General Purpose:
It combines two popular methodologies for visualizing Bitcoin's value and sentiment: the classic "Rainbow Price Chart" and signals derived from the "Value per Transaction Ratio" (V/T Ratio) based on blockchain data. It is ideal for long-term investors looking for strategic entry/exit points.

Main Components:

Rainbow Price Chart:

Concept: Divides Bitcoin's price range into different market "sentiment zones" (e.g., "Bubble Zone," "FOMO Zone," "HODL Zone," "Accumulation Zone," "Buy Zone," "Fire Sale Zone") using colored bands. These bands are calculated as ascending and descending multiples of a base Exponential Moving Average (EMA), configurable by default to 200 periods.

Visualization: The zones are represented with transparent color fills on the price chart. A detailed legend in the top right corner of the chart explains the meaning of each color and sentiment zone.

Important Note: This type of chart is designed to be viewed and analyzed correctly on a logarithmic price scale. The indicator includes a visual reminder to activate this scale.

Value per Transaction (V/T) Ratio Signals:

Concept: Measures the average value per transaction on the Bitcoin blockchain by dividing the total transacted volume in USD by the number of transactions. This ratio is smoothed with an Exponential Moving Average (by default, 7 periods) and is framed within a dynamic Linear Regression Channel (LRC) based on standard deviation.

Signal Generation: Based on the position of the smoothed V/T Ratio within this LRC channel, the indicator generates signals directly on the price chart, such as:

"BOTTOM": Low price, V/T Ratio in the lower band of the LRC.

"SEMI-LOW" / "SEMI-HIGH": Intermediate phases within the channel.

"ATH" (All-Time High): Potentially overvalued price, V/T Ratio in the upper band of the LRC.

On-Chain Data: The indicator requests external daily on-chain data for total transacted volume (TVTVR) and number of transactions (NTRAN) from the Bitcoin blockchain.

Diagnostic Panes: Includes plots of the raw on-chain data (volume and number of transactions) in a separate pane, which are useful for debugging or verifying the data source. The lines for the V/T Ratio itself and its LRC channel are not plotted by default but can be activated in the code for deeper analysis.

Ideal for:
Bitcoin investors and "hodlers" who desire a visual tool that combines price-based market cycle context with fundamental signals derived from on-chain activity, to help identify key moments for accumulation or potential distribution.

Considerations:

Relies on the availability of external on-chain data (QUANDL:BCHAIN) within TradingView.

Functions best on a daily timeframe.