Ark Crypto Heatband

The crypto landscape is largely dominated by BTC and characterised by cyclical stages with varying degrees of mean reversion.

To understand what stage of the cycle we are currently experiencing, it is useful to examine to what degree the current BTC price has extended beyond a long term average. This is true even when analysing other crypto assets and helpful to view side by side.

This indicator uses the 1400 period daily SMA, which is broadly the 200 period weekly SMA. This can be configured, but historically has represented a baseline to which BTC commonly returns.

The graph plots current price in terms of multiples of this long term average. Traditionally, at multiples beyond 10, BTC is considered overextended with a higher likelihood of trending towards the mean thereafter. Colors indicate the extend of price extension.

The indicator specifically references BTC by default on all charts as it is designed to use BTC as general purpose indication of where crypto as a whole currently sits. Accordingly the indicator is only to be used on crypto charts.