Crypto hasn't even begun to melt faces - Part 2

FOMO and Greed is slowly creeping up again. Can you feel it? While the sub is full of trump news, I thought I'd spur some discussion on where the market stands on a macro- and cycle-timeframe.

TL;DR: we've got ways to go before we reach market risk similar to the last ATH.

Let's start off with a small refresher on Risk Metrics: These indicators measure the state of the market by how overbought or oversold it is. Where 0 is the ultimate buy opportunity, 100 is a clear "sell the bubble" signal. They do so by aggregating tons of indicators.

Always keep in mind:

All models are wrong, but some are useful. - George Box

We'll capture the market by taking a weighted average of my favorite metrics:

Alphasquared (link) - 40%

https://preview.redd.it/z47rtdrat7ee1.png?1798&format=png&auto=webp&s=4fc348b0774b65df84c2896a4521f9a58b762320

• This one is my most trusted metric and what I've used for almost two years now to DCA. It was the only one to pinpoint the Bear Market perfectly. With the best track record of all, we weigh this at 40%.
• The current Risk is: 60.8 out of 100

Benjamin Cowen (YouTube) - 30%

https://preview.redd.it/868nu8j5t7ee1.png?1376&format=png&auto=webp&s=b8ec3afe0a64f592d9145f79c0df8381177a2f98

• This one missed the 2022 bottom by a fair bit and it seems to have been quite high when we reached 73 risk. I like to diversify my indicators and there's a certain reputation around this so I'll include it, albeit at a lesser weight of 30%
• The current Risk is: 0.606 out of 1

RSI (link) - 20%

https://preview.redd.it/qmvs5m4xs7ee1.png?2072&format=png&auto=webp&s=3569af5cabae33230de6510d419c18237050cc1e

• We all know the RSI. It's a trusty indicator, albeit a simple one. This is a weekly timeframe.
• The current Risk is: 68.8 out of 100

CBBI (link) - 10%

• This one missed both the top in 2021 and the bottom in 2022, but not by a huge margin. It has since been refitted without mention, but we'll still include it with 10% weight.
• The current Risk is: 81 out of 100. This is somewhat strong selling territory!

Now, let's combine all of these

Verdict

We've calculated an overall weighted risk score of 64.4 out of 100 for the current BTC market conditions. Not exactly great buying territory, but there's quite some leeway upwards left.

Is now the best time to lump-sum all of your net worth? Probably not. But doing a bit of DCA can't hurt. The sad part about discovering crypto is that you're usually doing so during a bullrun. If this is you right now, the best you can do is create a plan for yourself. Like setting buy and sell points, scaling up and down with risk. I wrote a guide on how to do this here.

Personally, I'm looking at these indicators to decrease my DCA and start scaling out of the market once we hit higher levels.

But what does this mean for my favorite Alt and Altseason? - Let me know if you want a post about that! There's some interesting stuff to look at.