ABOUT THE INDICATOR
The index was created in March 2023 and will be available on Investe Mais from November 2024, with weekly updates.
The index consists of seven on-chain cycle indicators divided into three value areas: Accumulation Region - Distribution Region - Middle Region
The objective is to measure whether price Bitcoin is cheap or expensive from a cyclical perspective.
The index is composed of a weighted analysis of the following metrics:
1. PUELL MULTIPLE (MA7d): Evaluates the profitability of miners.
2. MVRV (MA30d): Compares market value with realized value (fair price).
3. SOPR LTH (MA30d): Profit spent by long-term holders.
4. SOPR STH (MA30d): Profit spent by short-term holders.
5. SOPR RATIO (MA30d): The ratio between short-term and long-term profit.
6. NUPL: Net Unrealized Profit/Loss of the network.
7. SUPPLY IN LOSS (MA7d): Percentage of Bitcoins that are currently in loss.
⚙️ The Mechanics of Calculation
The algorithm classifies the status of each of these 7 indicators into three main zones:
• 🟢 Accumulation (Buy Zone)
• 🟡 Neutral (Uncertainty Zone)
• 🔴 Distribution (Sell Zone)
In addition, the system identifies the Primary Trend (Bull or Bear Market) to adjust the weight of each indicator.
The Final Result (0% to 100%)
• Close to 0% (Maximum Accumulation):
This means that the risk of a decline is low and historically represents the best market funds for BUYING. The market is at a “discount.”
• Close to 100% (Maximum Distribution):
Means that the market is extremely heated and participants are taking profits. Historically, it represents market tops and a time to SELL.
• 50% (Break-even Point):
Neutral zone where the market decides its next direction.