Blockchain Fundamentals - Active Address Sentiment Osc. [CR]

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Blockchain Fundamentals: Active Address Sentiment Oscillator AASO [CR]

Back with another script today, this one is a useful tool in helping to determine bitcoins value. We are looking at 2 data sources: the daily active addresses on the BTC blockchain, and the daily returns of BTC.

THIS INDICATOR WILL ONLY GIVE YOU THE CORRECT RESULTS ON THE DAILY TIMEFRAME

There is an interesting relationship that you can see by comparing the two timeseries. But for us to create a good indicator we first need to normalize the data. So we look at the percent change over the past 28 days for each metric (DAA and price).

THIS INDICATOR WILL ONLY GIVE YOU THE CORRECT RESULTS ON THE DAILY TIMEFRAME

We then calculate standard deviation bands around the DAA metric. We finalize them by averaging the bands over a 28 day period.

When the Price series (yellow line) is higher than the SD bands BTC is considered overvalued or price is overheated. A pullback could be expected soon. When the Price series is below the SD bands BTC is considered undervalued or price is oversold.

THIS INDICATOR WILL ONLY GIVE YOU THE CORRECT RESULTS ON THE DAILY TIMEFRAME

This tool doesnt give signals on the one minute chart or tell you exactly when to buy or sell. BUT what it does do is act as a convenient macro sentiment indicator that is not based completely upon price.

In an attempt to narrow down the really juicy areas, if you seen the background color highlights with white, that means its likely a top or bottom. At the very least on a local sense and many times in a cyclical macro sense as well. It also narrows down the signal to a generally more profitable area.

This indicator is not meant to be used on timeframes other than daily (did I mention that already?). I am lazy and did not code the calculations to be MTF (which is why you have to use on the daily chart). If you want to code this, please forward it on to me and I will post an update with a heartfelt credit to you.
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Now the script will not run unless on daily timeframe to prevent anyone from getting incorrect readouts.
addressBitcoin (Cryptocurrency)bitcoinanalysisblockchainBTCcryptorhythmsFundamental AnalysisGrowthValue

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