The Bitcoin Combined Indicator is a tool designed to help you make informed decisions about buying or selling Bitcoin. It provides a single, actionable signal—"BUY," "SELL," or "NEUTRAL"—along with a percentage score that reflects Bitcoin's current market condition. Here's how to use it:
- Check the Signal: Look at the top of the page for the indicator's signal and score (e.g., "BUY (17.0%)").
- Interpret the Score: The percentage (0% to 100%) shows how undervalued or overvalued Bitcoin is based on the combined metrics. Lower scores suggest a buying opportunity, while higher scores indicate a potential selling point.
- Review the Details: Below the signal, you'll find the raw values of the Mayer Multiple and Fear & Greed Index, giving you insight into what’s driving the indicator.
- Monitor the Chart: The 30-day price chart helps you visualize Bitcoin’s recent trend, providing context for the signal.
Use this indicator as part of your broader trading or investment strategy, alongside other research and market analysis. Once you've decided your next move, consider securing your Bitcoin and protect it with a Ledger wallet for maximum safety.
The indicator’s score is a weighted average of two normalized metrics, scaled from 0% (extremely undervalued) to 100% (extremely overvalued). The signal is determined by these thresholds:
- BUY (< 30%): Bitcoin is likely undervalued, and market sentiment may be overly pessimistic—a potential buying opportunity.
- SELL (> 70%): Bitcoin may be overvalued, with excessive optimism in the market—a potential time to sell or take profits.
- NEUTRAL (30% to 70%): The market is in a balanced state, suggesting no strong action is needed.
For example, a score of "BUY (17.0%)" means the indicator is at 17% of its maximum value, well below the 30% threshold, signaling a strong buy opportunity.
This indicator was developed by combining two well-known Bitcoin metrics: the Mayer Multiple and the Fear & Greed Index. Here’s the process:
- Mayer Multiple: Calculated as the current Bitcoin price divided by its 200-day moving average (MA200). It’s normalized to a 0-1 scale using the formula (MM - 1) / (2.4 - 1), where values below 1 indicate undervaluation and above 2.4 suggest overvaluation.
- 200-Day Moving Average (MA200): The MA200 is a key technical indicator that smooths Bitcoin’s price data over the past 200 days, calculated by summing the daily closing prices and dividing by 200. It acts as a long-term trend filter: prices above the MA200 often signal a bullish market, while prices below suggest a bearish trend. In the context of the Mayer Multiple, the MA200 provides a baseline to assess whether Bitcoin is overbought or oversold relative to its historical average, making it a cornerstone of this indicator’s design. The MA200 line is also plotted on the chart for visual reference.
- Fear & Greed Index: A daily sentiment metric (0-100) sourced from Alternative.me, normalized by dividing by 100. Low values (e.g., < 25) reflect fear, while high values (e.g., > 75) indicate greed.
- Combination: The normalized values are combined with equal weights (50% each) into a single score: Indicator = (0.5 × MM_norm) + (0.5 × FG_norm). This score is then multiplied by 100 for a percentage. Thresholds of 30% and 70% were chosen based on historical patterns to define buy and sell zones.
The indicator leverages the Mayer Multiple’s focus on long-term price trends and the Fear & Greed Index’s insight into market sentiment, creating a balanced tool for Bitcoin analysis.
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