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 price has extended beyond the long term average that BTC has established. This is true even when analysing other crypto assets as BTC is the dominant force in the crypto asset class.
This indicator uses the 1400 period daily , which is broadly the 200 period weekly . 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 extent of price extension.
Where the indicator is applied to non BTCUSD pairs, a smoothed conversion is applied, seeking to superimpose the BTC long period onto the current chart.
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.
For best results on BTC , using BNC:BLX will give the longest historical view.
In true TradingView spirit, the author of this script has published it open-source, so traders can understand and verify it. Cheers to the author! You may use it for free, but reuse of this code in a publication is governed by House Rules. You can favorite it to use it on a chart.