Indicator Overview

The Altcoins Cost Bands indicator simulates the short-term holder cost basis using a synthetic positioning model that reconstructs recent participant entry levels from rolling, liquidity-weighted price dynamics. The algorithm derives a dominant cost anchor by aggregating price action over a fixed temporal window with adaptive weighting, then applies a normalised volatility transform to generate multi-sigma deviation envelopes around this anchor. These statistically bounded regimes quantify relative premium and discount states versus inferred recent cost distribution, with band spacing dynamically adjusting to changes in realised variance.

The result is a probabilistic cost framework that contextualises price on a logarithmic scale, enabling objective assessment of extension and compression relative to short-term market positioning without reliance on direct holder-level data.

Dual-Ticker Comparison Logic

The ‘Crypto’ fields allow the indicator to operate in both absolute price and relative performance modes, making it suitable for outright positioning or pair-based allocation decisions.

• Single Crypto Analysis: If Crypto 2 is left blank, the indicator measures Crypto 1 against US Dollars. This mode is designed to identify statistically stretched rallies, deep mean-reversion zones, and long-term accumulation conditions where price trades multiple standard deviations below its historical average.

• Relative Strength and Ratios: When both fields are populated, the indicator automatically constructs a ratio of Crypto 1 divided by Crypto 2, such as ETH/BTC or SUI/SOL. The metric is then calculated on the ratio itself, isolating relative performance and stripping out broad market beta. This enables precise identification of overperformance, underperformance, and regime shifts between assets.

How To Use

Premiums significantly above the mean (e.g., crossing +2σ orange or +3σ red bands) signal overextension, potential exhaustion from speculative buying, or inflated valuations during hype cycles, often warranting caution or profit-taking, while deep discounts below the mean (e.g., into -2σ teal or -3σ deep teal bands) indicate undervaluation, capitulation zones, or attractive entry points amid fear or dilution concerns.