This Bitcoin indicator measures the percentage of exchange-traded volume relative to the combined exchange and on-chain transaction volume. It helps traders gauge market activity and investor interest in BTC.
How the Indicator Works
- Thin Red Line: Represents the raw, unsmoothed daily value derived from volume data.
- Thick Black Line: A 7-day EMA (Exponential Moving Average) smoothing of the raw data for clearer trend analysis.
Data Sources
- Exchange volume and on-chain volume are sourced from Quandl (1-day resolution).
- Best suited for daily timeframes due to data granularity.
Interpreting the Indicator
- High Values: Indicates strong trader interest and active BTC trading.
- Low Values: Suggests BTC is "dormant"—used more for transfers than trading, potentially signaling accumulation opportunities in a bull market.
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Open-Source Script
The script is open-source, aligning with TradingView’s collaborative ethos. Traders can review or modify it, though republishing adheres to TradingView’s House Rules.
Related Keywords:
- Bitcoin (BTC)
- Blockchain analytics
- On-chain metrics
- Volume indicators
- Market volatility
FAQs
Q: Why use EMA smoothing?
A: EMA reduces noise, highlighting longer-term trends in trader activity.
Q: How reliable is Quandl’s volume data?
A: Quandl aggregates reputable exchange APIs, but always cross-verify with other sources.
Q: Can this predict price movements?
A: No—it reflects trading intensity, not direct price direction. Combine with other indicators for analysis.
Key Takeaways
- Monitors the ratio of exchange trading to on-chain activity.
- High ratios = trader frenzy; low ratios = accumulation phases.
- Use alongside fundamental analysis for robust decision-making.
Disclaimer: Not financial advice. Conduct independent research.