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 seven distinct market signals into a single score from 0 to 100, where higher values indicate greater speculative excess.
Metrics
BTC Funding Rate
20% weightPerpetual futures funding rate reflects leverage demand. High positive rates indicate crowded long positioning.
BTC Open Interest
20% weightTotal outstanding derivative contracts. Rapid growth signals speculative buildup and potential liquidation risk.
BTC Dominance
10% weightBitcoin's share of total crypto market cap. Falling dominance often signals capital rotation into riskier assets.
Altcoin Relative Performance
15% weightHow altcoins perform relative to Bitcoin. Strong alt outperformance signals late-cycle speculative excess.
Fear & Greed Index
15% weightComposite sentiment indicator combining volatility, momentum, social media, and surveys.
Social Sentiment
10% weightAggregate social media activity and sentiment around Bitcoin. Spikes indicate retail frenzy.
Macro Risk Proxy
10% weightMeasures 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 then multiplied by its weight to produce a weighted contribution.
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.
Regime Definitions
Capitulation / Fear
0-24Leverage is low, sentiment is depressed, and risk appetite has collapsed. Historically a zone of opportunity.
Neutral
25-49Metrics are near baseline. The market is neither overheated nor fearful.
Elevated
50-69Leverage, sentiment, or alt outperformance are trending higher. Conditions warrant attention.
Overheated
70-84Funding rates, open interest, and sentiment suggest the market is stretched. Risk of correction is elevated.
Euphoria
85-100The 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.
- • Some metrics use proxy data (e.g., social sentiment via trending coins) rather than direct sentiment surveys.
- • 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.