Crypto Market Risk Index
Hourly Technical Analysis for the Market and Top Cryptocurrencies
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Crypto Risk Index
Risk Index for Top Cryptocurrencies
By Market Cap
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Bitcoin Price History vs Bitcoin Risk Index
Ethereum Price History vs Ethereum Risk Index
What is the Crypto Risk Index?
The Crypto Risk Index evaluates the risk of entering crypto investments by simplifying the technical analysis indicators into a single index that provides you with the depth-of-the-market knowledge. You can use the Index to inform your investment strategy. Our proprietary algorithm learns from historic price and volume data and takes into account the following technical fundamentals for each cryptocurrency and the market:
- Short-term, mid-term, and long-term price movements
- Short-term volume changes
- Short-term and mid-term volatility
The Crypto Risk Index will only near 0 (Low Risk) or 100 (Extreme Risk) in a market with strong momentum. Even though 0 and 100 are theoretically possible, the Index may not reach these numbers in reality since the market usually balances itself out and reverses the direction when it nears the ends of the risk spectrum. It should be noted that the Crypto Risk Index can stay in High or Extreme Risk regions for extended periods in a Bullish market (for example January to April of 2021). Similarly, the Index can remain in the Low or Medium levels for a long time in a Bearish market (for example June to July 2021). Therefore, the Crypto Risk Index should be used in the context of the market trends and in conjunction with the general knowledge of the underlying cryptocurrency.
What is the Market Momentum?
Market Momentum shows the strength of the market and its direction. A declining market is either Bearish (strong) or Slightly Bearish (weak), and a ascending market either Bullish (strong) or Slightly Bullish (weak). A market that is moving sideways has a Neutral momentum.
How to Interpret the Crytpo Risk Index and Market Momentum?
Generally, when the Risk Index goes above 25 from Low into Medium Risk or above, it is a sign of a bullish market. and when it slides below 75 from Extreme into High or below, it is a bearish sign. An Index lower than 40 indicates the underlying cryptocurrency is under pressure, and an Index lower than 25 (Low Risk) indicates an extreme pressure on the price as a result of large sell volumes. Similarly, an Index higher than 60 conveys the underlying cryptocurrency is inflated due to high demands and buy volumes, and when the Index is higher than 75 (Extreme Risk) it indicates highly inflated prices, usually due to hype in the market and very large buy volumes.
Inexperienced traders, influenced by emotions and social media campaigns, FOMO buy when the Risk Index is High or Extreme and when the price correction happens become "bagholders" or end up panic selling their assets when the Risk Index is Low or Medium, resulting in capital loss. Experienced traders, on the other hand, buy when the Risk is Low or Medium and momentum is Bullish and sell (or HODL) when the Risk is High or Extreme and momentum is Bearish.
Why CMB's Proprietary Crypto Risk Index?
We use our proprietary algorithm to calculate the risk index and market momentum for each major cryptocurrency and also for the crypto market every hour. Using these risk indexes, you can get deep into the market and inform your crypto investment strategy on the go and every hour. Our risk index is based on technical analysis of the underlying crytpo asset fundamentals. Therefore, our index is not influenced by social media marketing campaigns, FUD, or orchestrated Pump & Dump movements. You can reliably consider the Crypto Risk Index as another tool in your technical analysis toolbox.
The Crypto Risk Index bullet chart shows the current Index (as of the last hourly update) comparing to the last daily close Index (as of the last 12:00 AM UTC update), so you can see the market trend as of last daily close. In addition, you can see the Risk Level over the color spectrum, running from Low (Index 0) to Extreme Risk (Index 100) levels. The summary also includes Market Momentum, which is the market strength or weakness indication.
Risk of Cryptocurrency Investment
Always remember, investment in crypto is not about certainty, but about probability. Many social, political, and economical factors affect the crypto market, and therefore no one can predict the market movements with certainty. Cryptocurrency markets are very volatile and there is inherent risk in the market. The Crytpo Risk Index and Market Momentum only give you a general overview of where the market is at that moment, in addition to general trend based on the previous market behaviors. These risk levels tell you how risky it is to enter a crypto investment, and the market momentum tells you the market direction and its strentgh. These is no guarantee for the future direction of the matket. Even Low Risk level does not mean Zero Risk. You should always do your own research and evaluate your investment strategy based on your risk tolerance.
