Methodology

How Bitcoin Euphoria Score works

What It Measures

The Bitcoin Euphoria Score is a daily composite indicator that estimates whether the Bitcoin and broader crypto market is entering euphoric, overheated conditions. It combines six distinct market signals into a single scaled score where 100 represents peak euphoria. Readings can exceed 100 during extreme conditions. Higher values indicate greater speculative excess.

Metrics

BTC Funding Rate

25% weight

Perpetual futures funding rate reflects leverage demand. High positive rates indicate crowded long positioning.

BTC Open Interest

25% weight

Total outstanding derivative contracts. Rapid growth signals speculative buildup and potential liquidation risk.

BTC Dominance

10% weight

Bitcoin's share of total crypto market cap. Falling dominance often signals capital rotation into riskier assets.

Altcoin Relative Performance

15% weight

How altcoins perform relative to Bitcoin. Strong alt outperformance signals late-cycle speculative excess.

Fear & Greed Index

15% weight

Composite sentiment indicator combining volatility, momentum, social media, and surveys.

Macro Risk Proxy

10% weight

Measures macro risk appetite using traditional market signals like VIX levels and equity performance.

Normalization

Each metric produces a raw value that is normalized to a 0-100 subscore. The normalization uses linear scaling based on historically observed ranges. For metrics where lower values indicate more euphoria (like BTC dominance), the scale is inverted. Each normalized subscore is multiplied by its weight, and the resulting weighted average is then scaled so that 100 represents the practical ceiling of euphoric conditions.

Weighting

The composite score is a weighted average of all active metric subscores. Weights reflect each metric's relative importance in measuring speculative conditions. If a metric is unavailable, its weight is redistributed proportionally across the remaining active metrics.

BTC Funding Rate25%

BTC Open Interest25%

BTC Dominance10%

Altcoin Relative Performance15%

Fear & Greed Index15%

Macro Risk Proxy10%

Regime Definitions

Death

0-20

Complete market washout. Leverage wiped, sentiment at rock bottom, capital fleeing. Historically the deepest zone of opportunity.

Capitulation

21-30

Leverage is low, sentiment is depressed, and risk appetite has collapsed. Historically a zone of opportunity.

Fear

31-40

The market is fearful. Positioning is defensive and speculative activity is subdued.

Neutral

41-60

Metrics are near baseline. The market is neither overheated nor fearful.

Warming

61-70

Speculative activity is picking up. Funding, sentiment, and rotation signals are trending above baseline.

Elevated

71-80

Leverage, sentiment, or alt outperformance are running hot. Conditions warrant attention.

Overheated

81-100

Funding rates, open interest, and sentiment suggest the market is stretched. Risk of correction is elevated.

Euphoria

101-200

The market is in a state of euphoria. Historically, these conditions precede significant pullbacks.

Known Limitations

• The score is calculated daily. Intraday market shifts may temporarily diverge from the latest reading.
• Normalization ranges are based on recent historical context and may need adjustment as market structure evolves.
• The score measures speculative conditions, not price direction. High euphoria can persist for extended periods before a correction occurs.
• Open interest data uses Binance only as a proxy for the broader derivatives market.