Bitcoin Thermocap [InvestorUnknown]

8 Sep

The Bitcoin Thermocap indicator is designed to analyze Bitcoin's market data using a variant of the "Thermocap Multiple" concept from BitBo. This indicator offers several modes for interpreting Bitcoin's historical block and price data, aiding investors and analysts in understanding long-term market dynamics and generating potential investing signals.

Key Features:

1. Thermocap Calculation

• The core of the indicator is based on the Thermocap Multiple, which evaluates Bitcoin's value relative to its cumulative historical blocks mined.
  
• Thermocap Formula:
  

Source: Bitbo

Pine Script®

2. Multiple Display Modes:
The indicator can display data in four different modes, offering flexibility in interpretation:

• RAW: Displays the raw Thermocap value.
  
• LOG: Applies the logarithm of the Thermocap to visualize long-term trends more effectively, especially for large-value fluctuations.
  
• MA Oscillator: Shows the ratio between the Thermocap and its moving average (MA). Users can choose between Simple Moving Average (SMA) or Exponential Moving Average (EMA) for smoothing.
  
• Normalized MA Oscillator: Provides a normalized version of the MA Oscillator using a dynamic min-max rescaling technique.
  

3. Normalization and Rescaling

• The indicator normalizes the Thermocap Oscillator values between user-defined limits, allowing for easier interpretation. The normalization process decays over time, with values shrinking towards zero, providing more relevance to recent data.
  
• Negative values can be allowed or restricted based on user preferences.
  

Pine Script®

Usage
The Bitcoin Thermocap indicator is ideal for long-term market analysis, particularly for investors seeking to assess Bitcoin's relative value based on mining activity and price dynamics. The different display modes and customization options make it versatile for a variety of market conditions, helping users to:

• Identify periods of overvaluation or undervaluation.
  
• Generate potential buy/sell signals based on the MA Oscillator and its normalized version.
  

By leveraging this Thermocap-based analysis, users can gain a deeper understanding of Bitcoin's historical and current market position, helping to inform investment strategies.