BTC – VERI - Valuation & Entity Ratio Index

VERI: Valuation & Entity Ratio IndexObservation-only.
Data: IntoTheBlock.

Overview & Philosophy
The name VERI is derived from the Latin Veritas (Truth). In a crypto market often driven by deceptive speculative noise, this indicator seeks to establish the "On-Chain Truth" of a price trend.
It operates on the thesis that price action is only sustainable when verified by high-conviction capital flows.VERI is a fundamental composite oscillator that fuses Entity Behavior (Who is holding?) with Network Valuation (Is the price fair?) to identify Bitcoin market cycle extremes.

The "Alpha"
Why this Composite stands out: on-chain metrics often tell only half the story.

• MVRV tells you if the price is cheap, but not if anyone is actually buying.
  
• Whale Activity tells you if large players are moving, but not if they are accumulating at a value discount.
  

VERI fuses these two dimensions into a single Z-Score. It identifies the rare, high-probability moments where Smart Money Conviction intersects with Deep Value.

Methodology
The Mathematics of VERI: The indicator constructs a composite index using three fundamental metrics from IntoTheBlock:

• The "Who" (Entity Ratio): We calculate the flow ratio between Whales (>1% supply holders) and Retail (<0.1% supply holders). A rising ratio indicates supply is transferring from weak hands to strong hands.
  
• The "Why" (Valuation Multiplier): We utilize the MVRV (Market Value to Realized Value) ratio. To isolate value opportunities, we use the inverse (1 / MVRV).
  
• The Fusion: These factors are multiplied to create the raw VERI index.
  

Normalization & Inversion
We apply a rolling Z-Score (standard deviation from the mean) and invert the result.

How to Interpret the Indicator
Because the output is inverted, the visual logic matches price action intuitively:

🟥 Distribution Zone (High Values > 1.5):
The Signal: "Low Conviction Overvaluation."
Context: The price is historically expensive relative to the cost basis (High MVRV), and Whales are distributing coins to Retail.Implication: Historically precedes macro tops or deep corrections.

🟩 Accumulation Zone (Low Values < -1.5):
The Signal: "High Conviction Undervaluation."Context: The price is historically cheap (Low MVRV), and Whales are aggressively accumulating relative to Retail.
Implication: Historically precedes macro bottoms and generational entry points.

Zero Line: Represents the historical baseline. A crossover of the zero line often confirms a regime shift (e.g., from Bear to Bull).

Visual Guide & Features

1. Dynamic Coloring: The line turns Red in the Distribution Zone, Blue in the Accumulation Zone, and Orange during neutral trends.
   
2. Zone Labels: Static labels are pinned to the left side of the chart for immediate context.
   
3. The "Data Check" Monitor (Status Table): Since this indicator relies on third-party fundamental data, we have included a diagnostic table in the bottom-right corner.
   

Data Check Monitor Guide

• STATUS: LIVE (Green): The indicator is functioning correctly. All data feeds (Whales, Retail, MVRV) are being retrieved successfully.
  
• STATUS: WAIT (Red): The indicator cannot retrieve data. This might happen for some reasons, e.g. your TradingView plan may not support IntoTheBlock integration.
  

Settings

• Lookback Period (Default: 365): The window used for Z-Score normalization. We use a full year to smooth out seasonal volatility.
  
• Smoothing (Default: 7): A 7-day smoothing is applied to the signal to filter out daily noise.
  
• Zone Thresholds: Users can customize the specific Z-Score levels for the Distribution and Accumulation bands.
  

Disclaimer
This script is for research and educational purposes only. It uses historical on-chain data to visualize market structure and does not constitute financial advice. Past performance of whale entities does not guarantee future results.

Tags
bitcoin, btc, on-chain, mvrv, whales, valuation, fundamentals, cycle, oscillator, veri