On-Chain Momentum | QuantumResearch

QuantumResearch On-Chain Momentum Indicator

The On-Chain Momentum Indicator is a unique macro-market analysis tool that aggregates multiple on-chain signals to provide insights into Bitcoin’s fundamental market trends. By leveraging real-time on-chain metrics, this indicator helps traders and investors gauge market momentum, capital flows, and potential trend shifts. 🚀📊

⚠️ This script is manually updated to ensure that the latest on-chain data is accurately reflected. The underlying data is extracted from a Google Spreadsheet that tracks various on-chain indicators.

1. Data Sources & Methodology

This indicator consolidates four major on-chain categories, each derived from multiple fundamental Bitcoin metrics:

📌 On-Chain Activity

• Miner Revenue Momentum
  
• Exchange Inflow Momentum
  

📌 Market Profitability

• Supply in Profit Momentum
  
• MVRV Momentum
  
• AVIV Momentum
  
• STH-MVRV Momentum
  

📌 Spending Behavior

• SOPR Momentum
  
• Realized Profit/Loss Ratio Momentum
  

📌 Wealth Distribution

• SLRV Ribbons Momentum
  

Data Extraction Process:

• The raw on-chain data is processed and aggregated within a Google Spreadsheet, which applies momentum calculations to each metric.
  
• The results are then manually updated in this script to ensure an accurate reflection of on-chain trends.
  
• The script assigns a momentum value (+1 for bullish, -1 for bearish) based on pre-defined historical trend patterns.
  

2. How It Works

A. On-Chain Market Regimes

• The script analyzes historical on-chain behavior to determine whether the market is in a bullish or bearish phase.
  
• Each major transition is manually updated based on on-chain macro shifts.
  
• Market phases are categorized based on miner revenue, exchange flows, profitability, spending behavior, and wealth distribution trends.
  

B. Trend Identification & Signal Generation

• Bullish Trend: If on-chain momentum metrics confirm strong accumulation behavior, the indicator turns green (Long). ✅
  
• Bearish Trend: If on-chain momentum suggests distribution or capitulation, the indicator turns red (Short). ❌
  
• Neutral Phase: If on-chain activity is mixed or inconclusive, the indicator remains gray (No clear signal). ⚪
  

C. Manually Updated On-Chain Data Integration

• Unlike standard automated indicators, this script requires periodic manual updates to incorporate the most recent on-chain data.
  
• This ensures that the indicator remains aligned with the latest fundamental trends.
  
• The historical momentum shifts are carefully mapped based on previous on-chain cycles.
  

3. Visual Representation

A. Color-Coded Momentum Signals

• Green Bars: Strong positive on-chain momentum 🟢
  
• Blue Bars: Weak or negative on-chain momentum 🔴
  

B. Time-Based Macro Shifts

• Each major historical period is defined based on key on-chain shifts.
  
• The script provides clear visual segmentation of past macro-regimes.
  

C. Trend-Based Alerts

• Long Signal: When on-chain data turns strongly bullish.
  
• Short Signal: When on-chain data turns bearish.
  
• Alerts notify traders when a new macro cycle begins based on updated data. 🔔
  

4. Customization & Parameters

• Color Modes: 8 different visualization styles for enhanced clarity.
  
• Historical Market Phases: Adjustments are made based on historical on-chain macro trends.
  
• Manual Updates: Data is updated in accordance with key on-chain developments.
  

5. Trading & Investing Applications

📊 Best Used For:

• Long-Term Market Analysis – Helps investors identify Bitcoin market cycles.
  
• Trend Confirmation – Serves as an additional confluence factor for technical setups.
  
• Macro Risk Management – Provides a big-picture perspective on market structure.
  

⚠️ Disclaimer: While on-chain metrics provide valuable insights, no single indicator should be used in isolation. Traders and investors should combine this with other macroeconomic, technical, and fundamental analysis tools.


6. Final Thoughts

• The On-Chain Momentum Indicator provides a clear, structured view of Bitcoin’s macroeconomic health.
  
• By combining key on-chain metrics, traders can identify significant market transitions with improved clarity.
  
• This script is manually updated to ensure it remains aligned with the latest on-chain trends.
  
• While this tool is highly effective for macro analysis, it should be used as part of a comprehensive trading/investing strategy.