INDICATOR GLOSSARY

Key Terms,
Plain Language

Definitions of the on-chain and market indicators that appear across this site — what each measures, what it means in context, and why it matters for phase identification.

MVRV Z-Score
On-Chain Valuation

Market Value to Realized Value compares Bitcoin's total market cap to its "realized cap" — the aggregate value of all BTC at the price they last moved on-chain.

The Z-Score normalizes this ratio relative to its historical standard deviation, making it comparable across different cycle magnitudes.

High Z-Score = coins are collectively sitting at a large unrealized profit relative to history (elevated risk). Low or negative Z-Score = coins are near or below their average acquisition cost (historically favorable conditions).
Funding Rate
Derivatives Market

Funding rates are periodic payments between long and short positions in perpetual futures markets. When rates are persistently positive, long holders are paying shorts — meaning the market is net-long and leveraged in that direction.

This is a sentiment and leverage indicator, not a directional predictor on its own.

Persistently elevated positive funding = crowded leveraged longs, historically associated with elevated short-term reversal risk. Negative funding or near-zero = leverage overhang reduced or flipped, often seen near capitulation bottoms.
Fear & Greed Index
Sentiment

A composite sentiment index (0–100) that aggregates signals including volatility, market momentum, social media volume, surveys, dominance, and trend data.

0 = Extreme Fear, 100 = Extreme Greed. Originally built for crypto by Alternative.me.

Used as a confirmation signal alongside structural on-chain data. Extreme Fear alone doesn't confirm an Opportunity window — but when it coincides with depressed MVRV and exhausted selling pressure, it adds weight to the thesis.
AHR999
Cycle Cost Model

A Bitcoin valuation indicator that compares the current price to a 200-day average investment cost basis and a projected long-term exponential growth trend.

Developed by Chinese analyst ahr999 as a dollar-cost-average (DCA) reference tool. Values below 1.2 have historically indicated favorable allocation zones.

Used as a supplementary valuation check. Not the primary driver of zone classification, but useful for confirming when price has significantly undershot its long-term trend model.
Market Stage
BTC Compass Framework

The BTC Compass classification of current market conditions across three states: Opportunity Zone (historically favorable), Neutral Zone (no clear edge), and Risk-Control Zone (conditions historically associated with elevated risk).

Stage is determined by a composite scorecard across multiple independent indicator layers. No single indicator determines the stage.

The primary output of the system. All other indicators feed into stage determination — this is the signal you act on, not the underlying indicators individually.
Risk-Control Zone
BTC Compass Framework

A market stage reading indicating that multiple indicators have simultaneously reached historically elevated territory — stretched valuation, high unrealized profit concentration, elevated sentiment, and/or deteriorating structural on-chain signals.

This is not a crash prediction. It is a signal that the historical risk-reward of adding new long exposure has become asymmetrically unfavorable.

Suggested posture: reduce or pause new long exposure. Protect existing positions. Do not chase momentum. The historical cases show that Risk-Control zones precede significant drawdowns — even when they don't feel like it at the time.
METHOD

See how all these indicators are used together

The Method page explains the full framework — how individual indicators are layered into a single composite stage reading.

Read the Method
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