Altcoin Risk + RS vs BTC

1. What is this indicator?

The Altcoin Risk + RS vs BTC indicator is a cycle-based investment tool, designed to answer one key question:

“Is this altcoin both relatively strong and not overheated?”

It combines two essential dimensions of decision-making:

Risk (cycle & valuation) – Is the price too extended?

Relative Strength (RS) – Is capital flowing into this altcoin instead of Bitcoin?

This indicator is not for short-term trading.
It is optimized for mid-to-long-term positioning, portfolio allocation, and avoiding cycle tops.

2. Core concepts
2.1 Risk Component – “Is the altcoin overheated?”

The Risk score (0 → 1) measures how far the altcoin has moved relative to its own historical growth path.

It combines three elements:

Deviation from long-term cycle SMA (2–3 years)
→ Measures long-term valuation vs cycle trend

Log distance from 20-week moving average
→ Identifies bull vs bear regime

Trend momentum (50-day / 50-week MA)
→ Captures acceleration or exhaustion

Interpretation:

Risk Level Meaning
Low (≤ 0.3) Undervalued / accumulation
Medium (0.3–0.6) Healthy trend
High (≥ 0.8) Overheated / distribution
2.2 Relative Strength (RS) vs Bitcoin – “Is it beating BTC?”

Relative Strength is calculated as:

RS = Altcoin Price / Bitcoin Price


Then compared to its 40-week moving average.

Interpretation:

RS Condition Meaning
RS > MA40 Altcoin outperforming BTC
RS < MA40 BTC stronger (alt underperforming)

This ensures you only buy altcoins that are actually attracting capital, not just rising because BTC is rising.

3. Combined logic (the key idea)

An altcoin is attractive only when BOTH conditions are true:

✅ Condition 1 – Risk filter
Altcoin Risk < Bitcoin Risk


→ The altcoin is not more overheated than BTC

✅ Condition 2 – Relative Strength filter
RS > RS 40W MA


→ The altcoin is outperforming BTC

4. Indicator signals (visual meaning)
Background Color Meaning Action
🟢 Green Low risk + strong RS Accumulate / DCA
🟡 Yellow Mixed conditions Wait / monitor
🔴 Red High risk or weak RS Avoid / reduce
5. How to use it correctly (step-by-step)
Step 1 – Timeframe

Weekly chart only

Daily or lower timeframes will generate noise

Step 2 – Asset selection

Best suited for:

ETH

SOL

BNB

KAS

AVAX
❌ Not recommended for meme coins or illiquid assets

Step 3 – Capital allocation

Focus only on green-zone altcoins

Ignore “interesting narratives” if the indicator is red

Step 4 – Portfolio discipline

Increase exposure when green appears after a long red/yellow period

Reduce exposure when risk turns red, even if price is still rising

6. What this indicator is NOT

❌ Not a scalping tool
❌ Not a top/bottom picker
❌ Not predictive of short-term price movements

It is a risk management and capital allocation framework.

7. Typical mistakes to avoid

Using it on daily charts

Buying altcoins with high RS but very high risk

Ignoring Bitcoin risk context

Applying it to hype-driven meme coins