The Bitcoin risk index is exiting the "green zone": what this means for the market
The Bitcoin market is sending a new signal. According to my analysis of on-chain data, the Bitcoin Risk Index has confidently exited the extremely low zone and is shifting into the medium-risk area. This indicator, which I closely monitor, has already surpassed its 90-day moving average, indicating a change in market dynamics.
The metric is calculated as the ratio of Delta Cap to market capitalization, adjusted by a scaling factor. Simply put, Delta Cap is the difference between realized capitalization (the valuation of all coins based on the price of their last movement) and the average capitalization over the network's entire history. The higher this ratio, the more expensive the market is relative to its "fair" historical baseline, and the greater the potential for a correction.
Historical Context and Current Levels
It is important to understand that current values are still far from the peaks of past cycles. For comparison: at the market lows of 2015 and 2018, the index surged to ~4.20 and ~4.39, respectively. During the stressful periods of 2022—in June and November—it reached levels around 3.37-3.40. Currently, we are merely observing an exit from the low-risk zone, not an approach to these historical extremes.
However, there is a critically important nuance: since 2018, the index's peak values have been forming a downward trend. Each subsequent high is lower than the previous one. This means that mechanically relying on the old thresholds of 4.0-4.4 is no longer possible—the market is growing, and its "normal" risk level is shifting. The current reversal could occur at much more modest values.
Practical Takeaway for Investors
The signal we are receiving is not a marker of a "bottom" or a "top," but an indicator of growing risk momentum. BTC is no longer in the undervalued zone where it was at the start of the cycle. There is still some downside room, but the market is gradually transitioning into a phase where corrections become more likely.
My expert opinion: The current dynamics of the risk index are a classic sign of the middle of a bull cycle. The market is no longer "cheap," but it is not yet "overheated." This is a zone that requires more balanced risk management and readiness for increased volatility, rather than indiscriminate buying on every dip.