🔗Blockchain Fundamentals - Bitcoin's Stock to Flow Ratio🔗Blockchain Fundamentals - Bitcoin's Stock to Flow Ratio by Cryptorhythms
Intro
What is a stock to flow ratio and why is it important? The stock-to-flow ratio of a commodity is the amount of the asset that is held in reserves divided by the amount produced every year.
The higher the stock-to-flow ratio the reduced inflation occurs on the asset annually. Commodities with a higher stock-to-flow ratio are preferred for their scarcity.
How does it relate to Bitcoin?
Today, Bitcoin has a considerable lower stock-to-flow ratio than gold and this is where the opportunity presents itself. Bitcoin’s software has a core component cooked into the protocol in the form of an event called “the halvening”
‘The halving’ is an event that happens every 210,000 blocks or roughly every 4 years where the block reward given to the miners for securing the network gets halved. For example in 2009 the block reward was 50 BTC and today in 2019 it currently sits at 12.5 BTC with the ETA for next halving happening on Mon, 25 May 2020 which will take reward down to 6.25 BTC.
The idea that Bitcoin is the first ever truly verifiable, non-confiscatable fixed asset to exist is an extremely powerful concept. Without its strong and non-inflatable monetary policy Bitcoin would have a futile attempt of being able to disrupt gold and even accrue value in the first place.
Over the next several decades we will see Bitcoin’s stock-to-flow ratio increase significantly into never before seen water. No other asset will have anywhere near the scarcity of bitcoin.
With the incredible influx of talent coming into the industry to build out the infrastructure (custodial, ETF’s, futures) needed to allow legacy financial institutions to dip their toes in the soon smooth and regulated crypto asset waters. The next few years will be very interesting.
You might say "where will all this capital come from to propel bitcoin to new all time highs?"
1. Well asteroid mining is coming which could well eliminate golds scarcity. Your garden variety metallic asteroid could contain as much gold as half the gold humanity has ever mined!
2. Countries/economies with negative interest rate monetary policy and /or heavy quantitative easing. Their currency supply and debt just keep increasing...
3. Countries looking for ways around the USD dominated and US controlled financial systems (Iran, Russia, Venezuela, North Korea, etc)
4. There's tons more I just wanted to highlight a few.
Usage
You can compare Bitcoin with various other precious metals and commodities from the settings panel. I suggest a logarithmic scale for this indicator, other wise most assets are clumped at the bottom:
There's also plots for the forecasted (estimated) SFR ratios after the 2020 and 2024 Halvings.
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Cycle
VACPWelles Wilder (delta phenomenon) a 4-day rotation indicator
PVAC is the acronym Alan uses for a four-day rotation cycle. The cycle itself is circularly continuous every days of the week, forever, including every holiday. Thus if, for instance, Monday was a P, Tuesday is V, Wednesday is A, Thursday is C. At this point the cycle repeats, with Friday being P, Saturday being V, Sunday being A, and the following Monday being C.
Having started, the cycle never changes. While each day tends to have the characteristics shown below, like all cycle tools, there are inversions, which will last a cycle or at times even more, and have reasonable odds of inverting regularly.
A trader who wants to incorporate a four-day rotation cycle into their work is encouraged to study for themselves whether this adds value.
Day: V-day Color: Red Characteristics: Closes well for bulls; Use your fleece bars Bar8 and Bar11; Bar8 open often a V-day return target; 'V' return comes early in day in bear moves, late in day in bullish moves
Day: A-day Color: Blue Characteristics: Closes poorly for bulls; Use your fleece bars 8 and 11; Generally 'A' shaped, but may have a kick-leg after 3pm
Day: C-day Color: Orange Characteristics: Consolidation day, aka 'consoly' day. It may not chop, but it may have an
accumulation or distribution quality to the action; Trade often and trade fast; Pattern traders fade 4HHs and 4LLs with backfill/pullbacks 3 bars later; Apexes and angulars tend to have less importance; Numerical traders trade after Bar8 open and use support one horizontal below, resistance one horizontal above; C-day opens often at the 25%; The afternoon action tends to be opposite to the morning action
Day: P-day Color: Green Characteristics: Often a trend day. Find the trend and enter it; Often opens at the 75%; Trade P-days against a quartile; Watch for price to be above/below the first apex: buy above or sell below ; Do not fade dead zone, minimal trading
Multi-Instantaneous Frequency MeasurementI compiled all of Ehlers' IFM methods into one script - all written as functional blocks so you can simply add them to your own scripts.
Bonus! I also dropped in the Super Smoother, which is a much more efficient and low lag averaging method. I used it to clean the data before feeding it into other indicators.
Robust Cycle Measurement [Ehlers]The last of Ehlers Instantaneous Frequency Measurement methods.
This is a more robust version of this script.
I wrote it as a function, so you can simply copy and paste it into any script to add an adaptive period setting capability.
Cheers,
DasanC
Trader Set - Volume CycleThis is the cycle oscillator for the volume candle indicator. It supports all subt ypes but not 4 and 6 because how they are calculated (sub type 4 and 6 does not provide any cycle or any other type of possible calculation based on them by nature of the sub type)
Cosine, In-Phase & Quadrature IFM [Ehlers]Yet another method for determining the cycle of a market: this time, you have access to the two fastest and most accurate methods
as well as the option to average these methods together.
The controls are pretty straight forward:
Source lets you select the price data to perform calculations on (close, open, etc..)
Max Period is simply the cap for the algorithm when it's checking the validity of Periods.
-> If you notice your plots have a flat top, then increase this value to accept a wider range of Periods.
-> This setting has a min. value of 8 to reduce noise and a max of 100 to ignore waves from higher time frames.
Average? simply averages the two methods of calculation.
-> You may want to do this if you notice the two plots diverging a lot.
-> Cosine IFM tends to favor shorter periods; I-Q IFM tends to favor longer.
Cheers,
- DasanC
Adaptive Bandpass Filter [Ehlers]This is my latest bandpass filter - used to determine if a security is in a trend or cycle.
Now with an adaptive period setting! I use Ehlers in-phase & quadrature dominant cycle measurement (IQ IFM) method to set the period dynamically.
This method favors longer periods which tend to produce smoother, albeit laggier bandpass oscillator plots. From my quick tests, I tend to have lag between 4 and 8 bars, depending on the Timeframe.
The lower timeframes tend to have more noise and thus produce more interfering frequencies that may cause lag.
>Settings
Source: Select the data source to perform calc's on (close, open, etc...)
Period: Select the period to tune. Periods outside of this value will be attenuated (reduced)
Adaptive: Enable to have the I-Q IFM set the period for you (disables Period setting)
Bandpass Tolerance: Allow periods that are plus/minus the chosen period to pass.
Cycle Tolerance: Sensitivity of cycle mode. Lower values consider trends more frequent, higher values consider cycles more frequent.
Bandpass tolerance example: for instance, if this setting is 0.1 (10%) and Period is set to 20, then waves with a period of 18 - 22 will pass.
>How to read
Red line is the bandpass output, showing a lagged version of the dominant cycle representing the
Black lines are the upper and lower bounds for a cycle
Green Background indicates an uptrend
Red background indicates a downtrend
Adaptive Zero Lag EMA Strategy [Ehlers + Ric]Behold! A strategy that makes use of Ehlers research into the field of signal processing and wins so consistently, on multiple time frames AND on multiple currency pairs.
The Adaptive Zero Lag EMA (AZLEMA) is based on an informative report by Ehlers and Ric .
I've modified it by using Cosine IFM, a method by Ehlers on determining the dominant cycle period without using fast-Fourier transforms
Instead, we use some basic differential equations that are simplified to approximate the cycle period over a 100 bar sample size.
The settings for this strategy allow you to scalp or swing trade! High versatility!
Since this strategy is frequency based, you can run it on any timeframe (M1 is untested) and even have the option of using adaptive settings for a best-fit.
>Settings
Source : Choose the value for calculations (close, open, high + low / 2, etc...)
Period : Choose the dominant cycle for the ZLEMA (typically under 100)
Adaptive? : Allow the strategy to continuously update the Period for you (disables Period setting)
Gain Limit : Higher = faster response. Lower = smoother response. See for more information.
Threshold : Provides a bit more control over entering a trade. Lower = less selective. Higher = More selective. (range from 0 to 1)
SL Points : Stop Poss level in points (10 points = 1 pip)
TP Points : Take Profit level in points
Risk : Percent of current balance to risk on each trade (0.01 = 1%)
www.mesasoftware.com
www.jamesgoulding.com(Measuring%20Cycles).doc
In-Phase & Quadrature IFMThis indicator provides a continuous measurement of a securities' dominant cycle period, based on Ehlers ever-impressive reports and analysis tools.
This method uses in-phase and quadrature analysis, making use of the imaginary domain. This method is prone to favor longer periods and can
allow noise to greatly affect the end result.
>What does that even mean?
Essentially, you get a real-time (low lag) plot of the cycle period in bars. If the I-Q IFM reads "16" then you can expect the distance between swing highs and swing lows to be approx. 16 bars.
>How is this useful?
When you throw an RSI or MACD on your chart, you can now set the "Period" or "Length" value with confidence.
Knowing the dominant cycle period tells you that price reversal will occur around these intervals.
>Extending.
The better way to use this tool is by extending the script into any indicators that use a length or period that is set manually.
Simply use the "len" variable in your custom script to replace your input values.
Now you have a way to adaptively set the period value, using signal processing theory instead of just intuition ;)
PM if you have questions.
Cosine IFM [Ehlers]This indicator provides a continuous measurement of a securities' dominant cycle period, based on Ehlers ever-impressive reports and analysis tools.
>What does that even mean?
Essentially, you get a real-time (low lag) plot of the cycle period in bars. If the COS IFM reads "16" then you can expect the distance between swing highs and swing lows to be approx. 16 bars.
>How is this useful?
When you throw an RSI or MACD on your chart, you can now set the "Period" or "Length" value with confidence.
Knowing the dominant cycle period tells you that price reversal will occur around these intervals.
>Extending.
The better way to use this tool is by extending the script into any indicators that use a length or period that is set manually.
Simply use the "len" variable in your custom script to replace your input values.
Now you have a way to adaptively set the period value, using signal processing theory instead of just intuition ;)
PM if you have questions.
Simple Sine Wave GeneratorThe title pretty much sums up what purpose this tool serves. It is NOT an indicator, just a simple sine wave generator. You may use it to attempt to measure cycle periods occurring in the markets using "Wave Length (Bars)" setting in the "Format" panel. Other features include the sine wave phase is shift-able to the left and the right, and there is also an amplitude adjustment as well.
Recursive StochasticThe Self Referencing Stochastic Oscillator
The stochastic oscillator bring values in range of (0,100). This process is called Feature scaling or Unity-Based Normalization
When a function use recursion you can highlights cycles or create smoother results depending on various factors, this is the goal of a recursive stochastic.
For example : k = s(alpha*st+(1-alpha)*nz(k )) where st is the target source.
Using inputs with different scale level can modify the result of the indicator depending on which instrument it is applied, therefore the input must be normalized, here the price is first passed through a stochastic, then this result is used for the recursion.
In order to control the level of the recursion, weights are distributed using the alpha parameter. This parameter is in a range of (0,1), if alpha = 1, then the indicator act as a normal stochastic oscillator, if alpha = 0, then the indicator return na since the initial value for k = 0. The smaller the alpha parameter, the lower the correlation between the price and the indicator, but the indicator will look more periodic.
Comparison
Recursive Stochastic oscillator with alpha = 0.1 and bellow a classic oscillator (alpha = 1)
The use of recursion can both smooth the result and make it more reactive as well.
Filter As Source
It is possible to stabilize the indicator and make it less affected by outliers using a filter as input.
Lower alpha can be used in order to recover some reactivity, this will also lead to more periodic results (which are not inevitably correlated with price)
Hope you enjoy
For any questions/demands feel free to pm me, i would be happy to help you
Trader Set - Modified RSI MTFThis is a modified version of RSI MTF, a similar indicator can be found in public library if anyone is interested, mine, is fabricated to work with my methology with all the addition i will add to this (just like others when i added the ability to change the moving types in critical places of formula) so that students can experiment with them (it will come in next version). also, I normalize both sections for better visualization.
Please don't ask me for getting access. "CM Modified RSI MFI" search it for the base and almost similar indicator without my additions. This script will be available only for my students at the time being. like other scripts, if the learning material will be ready i will be announce in comment section, and like others, again, if i decide to sell this separated from courses i will announce in the comment section too.
Trader Set CycleA very heavily modified stochastic. As you can see in the picture, not only the range of movement is changes, but also, it's not clamped at 100 and will not clamp at -100. No more nasty noises when stochastic "sticks" to 100 when the price is constantly goes up or vice versa.
Please, don't ask for access, only my students from my classes will have access to this indicator, at least for time being. If at any time in future I wish to sell, you will find the price and how to buy in the comments bellow.
Ehlers Instantaneous TrendlineEhlers Instantaneous Trendline script.
This indicator was described by John F. Ehlers in his book "Rocket Science for Traders" (2001, Chapter 10: The Instantaneous Trendline).
CCI Cycle (Modified Schaff Trend Cycle)This is a modified Schaff Trend Cycle (STC), which is designed to provide quicker entries and exits.
I've been a huge fan of the STC for a long time, but being based on the MACD means its signals often lag by a bar or two (especially in fast moving markets). All I've done here is take the base STC script (all credit to user @LazyBear), and change the source to a modified CCI.
The CCI Cycle provides more timely entries and exits, often by 1-2 bars. The flip side of the increased responsiveness is a prevalence for more false signals (a perfect example is the 17th August on the above chart). It's the nature of the beast! Still, I've been using this for a few months now and it's (in my opinion) an upgrade on the standard STC.
As always, you will need to pair this with another indicator or method of technical analysis to provide a trade bias, as the CCI Cycle (and STC) aren't designed to trade every signal. In my experience, either divergence identification, or using one or more moving averages works particularly well.
The indicator is also MTF capable, so you can get some interesting results from that.
Any queries let me know.
DD
Missile RSI (RSI of momentum w/ Dominant Cycle length + Fisher)This is a predictive indicator that looks for explosions in momentum of the cycles in price and large shifts in Momentum (Fisher turns the Bimodal PDF into Guassian like) as statistically unlikely events, showing points to exit or reverse positions.
You can adjust the lowpass frequency cuttoff (Aka what cycles you want to remove from the calculations through the super smoother filter).
To be honest you can monkey trade the direction of the Signal if you'd like but the Divergences and Maxing of the values is whats most useful.
Let me know if you guys want me to add anything else.
Ehlers Reverse Exponential Moving AverageEhlers Reverse Exponential Moving Average script.
This indicator was originally developed by John F. Ehlers (Stocks & Commodities V. 35:10: The Reverse EMA Indicator).
DFT - Dominant Cycle Period 8-50 bars - John EhlerThis is the translation of discret cosine tranform (DCT) usage by John Ehler for finding dominant cycle period (DC).
The price is first filtered to remove aliasing noise(bellow 8 bars) and trend informations(above 50 bars), then the power is computed.
The trick here is to use a normalisation against the maximum power in order to get a good frequency resolution.
Current limitation in tradingview does not allow to display all of the periods, still the DC period is plot after beeing computed based on the center of gravity algo.
The DC period can be used to tune all of the indicators based on the cycles of the markets. For instance one can use this (DC period)/2 as an input for RSI.
Hope you find this of some interrest.
Better RSI with bullish / bearish market cycle indicator This script improves the default RSI. First. it identifies regions of the RSI which are oversold and overbought by changing the color of RSI from white to red. Second, it adds additional reference lines at 20,40,50,60, and 80 to better gauge the RSI value. Finally, the coolest feature, the middle 50 line is used to indicate which cycle the price is currently at. A green color at the 50 line indicates a bullish cycle, a red color indicators a bearish cycle, and a white color indicates a neutral cycle.
The cycles are determined using the RSI as follows:
if RSI is overbought, cycle switches to bullish until RSI falls below 40, at which point it becomes neutral
if RSI is oversold, cycle switches bearish until RSI rises above 60, at which point it becomes neutral
a neutral cycle is exited at either overbought or oversold conditions
Very useful, please give it a try and let me know what you think
