The Bitcoin risk index has left the "green zone": what this means for the market
A key on-chain metric for Bitcoin — the Risk Index — is showing a confident upward trend, emerging from the zone of extremely low values. Analysts note a shift of the indicator above its 90-day moving average, signaling a change in market phase.
This index is calculated as the ratio of Delta Cap to market capitalization, adjusted by a scaling factor. Delta Cap, in turn, represents the difference between realized capitalization (the value of all coins at their last movement price) and the average capitalization over the network's entire history. In simple terms, the higher this ratio, the more expensive the market is relative to its historical "fair" value, and the greater the potential for a correction.
Historical Context and Peak Compression
The current exit of the index from the low zone is a significant event. Previously, such movements preceded periods of increased volatility. However, it is important to note that the absolute values of the index remain below historical peaks. During previous bearish phases (lows in January 2015, December 2018, and stress periods from June to November 2022), the indicator reached levels of 4.20, 4.39, and 3.37–3.40, respectively.
A key nuance to consider: since 2018, the major peaks of the index have been forming increasingly lower highs. This phenomenon is a result of the metric normalizing against a growing market capitalization. As the Bitcoin market itself expands, fixed historical thresholds (e.g., 4.0) become less attainable, and mechanically applying them to assess overheating loses its meaning.
Current Signal: Not Overheating, but a Regime Change
Currently, the index has only just left the low-risk zone and entered the middle range. This means Bitcoin is no longer "cheap" by this metric, as it was at the start of the cycle, but it is also not in the overheating zone, which typically preceded major crashes. On the contrary, past market lows were formed precisely at extremely high index values — they marked turning points to the upside.
The practical takeaway for a trader is this: room for downward movement still exists. Since the index's highs are decreasing with each cycle, relying on previous thresholds of 4.0–4.4 is not advisable — the current reversal could occur at a noticeably lower value. The mere fact of exceeding the 90-day average is a signal of growing risk, not a marker of a reached bottom.
My professional opinion: The market is transitioning from an accumulation phase to a phase of conscious growth. As long as the index remains in the middle range, bulls have room to maneuver, but each new step upward will require an increasingly powerful inflow of capital. The key level to watch is not the static numbers of past cycles, but the dynamics of the index itself relative to its own moving average.