Indicators Are Not Crystal Balls
The purpose of mastering indicators is not to 'predict the price' — it's to understand the market's approximate current state: overheated, depressed, or balanced. This helps you stay rational.
Five Core Indicators
1. MVRV Z-Score
Compares Bitcoin's market value with its realized value. When Z-Score is very high (>7), the market may be overheated. When very low (<0), it may be near a cycle bottom.
2. Puell Multiple
Compares miners' daily revenue to its 365-day moving average. High values may indicate increased selling pressure from miners.
3. 200-Week Moving Average
An extremely simple long-term trend indicator. Price has rarely stayed below the 200W MA for extended periods in Bitcoin's history.
4. Bitcoin Rainbow Chart
Overlays colored bands on a logarithmic regression of Bitcoin's historical price. An intuitive visual reference, not a rigorous mathematical model.
5. AHR999
Combines short-term cost deviation with long-term valuation positioning to provide DCA amount reference zones.
How Beginners Should Use Indicators
Principle 1: Learn One at a Time
Pick one indicator you best understand, observe the market through it for 3–6 months, then introduce the next.
Principle 2: Understand Assumptions, Not Just Numbers
Every indicator has underlying assumptions. Understanding them helps you recognize when an indicator might fail.
Principle 3: Cross-Validate with Multiple Indicators
When several unrelated indicators point to the same conclusion, that conclusion has greater reliability.
Principle 4: Indicators Serve Your Strategy
Your core strategy is DCA. Indicators help fine-tune execution, not replace your strategy. Don't abandon DCA for short-term trading.
The most dangerous thing: treating indicators as buy/sell signals. No indicator can accurately predict future prices. The past does not equal the future.