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What is a Colin Talks Crypto Bitcoin Bull Run Index (CBBI) indicator?
The composite CBBI score is an average of the 9 metrics, which help in understanding what stage of the Bitcoin bull run and bear market cycles we are in. The score indicates whether we are approaching the top or bottom of a Bitcoin blow-off cycle. CBBI is not for day traders. This is for long term investors.
Higher score indicates potential top of Bitcoin blow-off cycle whereas lower score indicates potential bottom of Bitcoin blow-off cycle. The purpose of CBBI is to identify a blow-off top specifically as it is trained on the blow-off tops of 2013 and 2017.
What is a Blow-off top?
CBBI defines a blow-off top as a sudden, parabolic rise in price and volume, reaching a peak briefly, followed by an equally sudden, sharp decline in price.
CBBI indicator doesn’t predict the price and date of Bitcoin cycle top or bottom. It is an indicator of the top or bottom of the Bitcoin cycle.
Current CBBI index is made up of nine indicators,
- Pi Cycle Top Indicator
- Net Unrealized Profit/Loss (NUPL)
- RHODL Ratio
- The Puell Multiple
- 2-Year MA Multiplier
- Bitcoin Rainbow Chart
- MVRV Z-Score
- Reserve Risk
- Woobull Top Cap vs CVDD
Pi Cycle Top Indicator
The Pi Cycle Top Indicator forecasts the cycle top of Bitcoin’s market cycles. It uses the 111 day moving average (111DMA) and a newly created multiple of the 350 day moving average, the 350DMA x 2.
Net Unrealized Profit/Loss (NUPL)
Market Value is the current price of Bitcoin multiplied by the number of coins in circulation. Realized Value is the price of each Bitcoin when it was last sent from one wallet to another wallet.
RHODL Ratio
This indicator uses different age bands of coins weighted by the Realized Value of coins within each band.
The Puell Multiple
The revenue generated by bitcoin miners influences Bitcoin price over time. The Puell Multiple is calculated by dividing the daily issuance value of bitcoins (in USD) by the 365-day moving average of daily issuance value.
2-Year MA Multiplier
The 2-Year Moving Average Multiplier is a long term investment tool. It is duration which produces outsized returns.
Bitcoin Rainbow Chart
The Rainbow Chart highlights market sentiment by overlaying rainbow color bands on top of the logarithmic growth curve channel to forecast the potential future price direction of Bitcoin.
MVRV Z-Score
MVRV Z-Score is a bitcoin metric to identify periods where Bitcoin is extremely over or undervalued relative to its ‘fair value’. This analysis is done on blockchain. It uses three metrics, Market Value (blue line), Realized Value (orange line), Z-score (red line).
Reserve Risk
Reserve Risk indicator helps in visualizing the confidence amongst long term bitcoin holders relative to the price of Bitcoin at a given moment in time. When confidence is high and price is low, it’s an attractive risk/reward ratio. When confidence is low and price is high, it’s an unattractive risk/reward ratio.
Woobull Top Cap vs CVDD
Dotted lines indicate that the model uses only market price as its inputs whereas solid lines carry metrics like fundamentals of investor, network and user behavior gathered from the blockchain.
There are other models like fear & greed index and many more. CBBI should be used in conjunction with other indicators. CBBI is not a silver bullet to make buy/sale decisions. It has undergone many changes over its lifespan including the removal and addition of different metrics.
DISCLAIMER
The CBBI is not investment advice. It is a way of looking at long-term price movements while ignoring daily volatility. The CBBI is a relatively new index so use it with caution.
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