CryptoWeeklies / Glossary

What are valuation bands?

Valuation bands are a fair value line with envelopes drawn above and below it, showing the range price has historically travelled around that line.

How are valuation bands built?

A curve is fitted through log price across the asset's history — that is the fair value baseline. The residuals, the distance between actual price and that curve, have a spread; the bands are drawn at one, two and three standard deviations of it.

So the bands are not price levels anyone chose. They are a statement about how far this particular asset has historically wandered from its own trend.

What do the floor and ceiling bands mean?

The lower band is often labelled an accumulation floor and the upper a euphoria ceiling. Those names describe what has historically happened at those distances from trend, not what must happen. Price has traded outside both, and will again.

Why does refitting weaken valuation bands?

Because the curve is fitted to all available history, adding history changes it. A band that looks like a firm ceiling today can be redrawn upward after a year of higher prices. Any chart of this family shares that property, including rainbow charts and log regression.

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