The Bitcoin Researcher's PRO Risk Metric

Investing can be hard, but fortunately there are tools to make it easier. The Bitcoin Researcher's PRO risk metric is engineered to make the process simple. Of course, the metric is available for free at researchbitcoin.net/charts/

What is the Bitcoin Researcher's Pro Risk Metric

Mathematically, the PRO risk metric quantifies the risk of the bitcoin price being at either cycle bottom or cycle top. This metric spans from 0 to 1 and is updated daily based closing day's data inputs.

It evaluates the current risk associated with a Bitcoin investment from the perspective of market cycles.

The PRO risk metric scores the current risk of a Bitcoin investment in perspective of market cycles. If the PRO risk metric close to zero, the probability is high this is a cycle bottom and future price appreciations is likely. On the chart this is color coded in shades of blue.

Conversely, if PRO risk metric approaches one, the market is likely at a cycle top. Cycle traders might consider this an opportune moment to reduce their positions. These periods are highlighted in red on the chart.

Historically, per 2024-04-09,  the PRO risk metric has been below 0.2 for 30% of the days, between 0.2-0.8 for 46% and above 0.8 for 24%. As you see, there are ample opportunities to invest, it is all about timing correctly.

How to utilize the Risk Metric?

The application of the PRO Risk Metric will vary according to the investor's strategy. A straightforward approach could involve purchasing Bitcoin when the PRO Risk Metric falls below the 0.2 to 0.3 range and initiating sales when it surpasses the 0.7 to 0.8 threshold. Investors may tailor these parameters to align with their personal risk tolerance and investment goals.

Considerations

Every algorithm possesses the potential for optimization; however, this process inherently carries the risk of over-fitting based on historical data, which may not accurately predict future outcomes. Consequently, the PRO risk metric adopts a conservative stance.

The sole modification enacted is the facilitation of achieving significantly low levels. This adjustment is predicated on the observation that Bitcoin's price exhibits a general upward trajectory over time. Hence, even though a more opportune purchasing moment, as indicated by the risk metric code, may arise later, the actual price is often lower at the initial bottom. Nonetheless, this strategy necessitates a long-term investment perspective, presenting both advantages and disadvantages for the investor.

Disclaimer

The the PRO risk metric, is for informational purposes only and does not constitute financial advice, investment advice, trading advice, or any other advice. The content is presented "as is" without warranty of any kind, either express or implied. The Research Detective and its affiliates, authors, or agents are not liable for any investment decisions made based on the information provided. The performance of financial and cryptocurrency markets is inherently unpredictable and past performance is not indicative of future results. Investors should conduct their own research, analysis, and due diligence before making investment decisions. The use of the PRO risk metric and any associated strategies should be considered as part of a broader investment strategy and not as a sole basis for investment decisions.Users access and utilize the information at their own risk and are responsible for compliance with local laws and regulations.

The code

The code is developed by The Research Detective and is proprietary.