About this Bitcoin chart

By comparing the 28-day change in price (%) with the 28-day change in active addresses (%) of Bitcoin we can create a short-term sentiment indicator.

The gray lines on the graph show the evolution of active addresses.

At the outer limits of those gray lines are the standard deviation bands.

Dashed red line = upper limit

Green dashed line = lower limit

The orange line is the 28-day price change (%).

When the orange line reaches the upper limit (dotted red line) it is indicating that the short-term market sentiment is overheated. Because the rate of price increase is exceeding the rate of increase in active bitcoin addresses.

If we zoom in on the graph (by left-clicking and dragging) we can see that this usually corresponds to the price of $BTC (blue line) stagnating and/or retracing.

The opposite occurs when the 28-day price change reaches the lower limit (green dotted line). The market sentiment here is excessively bearish and we often see the price of $BTC increasing from then on.

In extreme market conditions, the 28-day price movement (orange line) aggressively breaks beyond the dotted red and green bands. This usually occurs in a major market decline or in the late stages of a bull market. I may add additional standard deviation bands to capture these movements, but for now I've left them out to keep the graph clean.

Data before 2015 is quite volatile and messy, so this chart starts on January 1, 2015.. #BitcoinETF #BitcoinATH 6/3/2024.