The Bitcoin risk index has left the "green zone": what this means for the market
One of the key on-chain indicators used to assess the degree of overheating in the first cryptocurrency market is beginning to show initial signs of awakening. This refers to the Bitcoin risk index, which, according to my observations on the CryptoQuant platform, has confidently surpassed its 90-day moving average. This is an important technical signal indicating a shift in the cycle phase.
How the risk index works and why it matters
The metric is based on the ratio of the so-called Delta Cap to Bitcoin's market capitalization, adjusted by a scaling factor. Delta Cap, in turn, represents the difference between the realized capitalization (the value of all coins at the price of their last movement) and the average capitalization over the network's entire history. In simple terms, this index shows how much Bitcoin's current price deviates from its "fair" historical value, measured through capital flows.
When the index is at low levels, the market is considered undervalued and in a low-risk zone. High values, on the contrary, have historically preceded major corrections and trend reversals.
Current picture: exiting the comfort zone
We are now observing the risk index leaving the low-value zone it was in at the start of the current cycle and moving toward the middle range. Breaking above the 90-day average is not a short-term spike but a sustained impulse. This indicates that the flow of capital entering Bitcoin is beginning to exceed average historical rates, increasing volatility.
It is important to understand that the current index values are still significantly below the peaks recorded during the bear markets of 2015, 2018, and 2022. At that time, the index surged to levels of 4.20, 4.39, and 3.37-3.40, respectively. However, since 2018, there has been a clear trend of declining maximum index values. This is due to the growth of total market capitalization: the larger the market, the harder it is to generate extreme relative indicators.
Practical conclusion: room for maneuver remains
Currently, Bitcoin is no longer "cheap" by this metric, but it is also not in the overheating zone that typically precedes crashes. There is still some downward margin. Relying on old threshold values of 4.0-4.4 no longer makes sense—the current reversal could occur at much lower levels.
My expert assessment: The market has entered a "moderate risk" phase. This is not a signal to panic, but rather a warning that easy money has been made. Further movement will be determined by the bulls' ability to hold current levels and generate new liquidity inflows. Until the index reaches the extremes of past cycles, it is premature to talk about an inevitable reversal, but vigilance should be increased.