Engine v4.2.1 · Backtest window 2021–2026 (3,386 daily observations) · Methodology last revised June 2026
About MK II
The MaxMetrics Risk Engine was rebuilt from the ground up in 2025, and MK II is the result. What changed:
- A new cycle-position domain (16% of the score) — it measures how far price has drifted from the 200-week moving average and from all-time highs. This is the most direct answer the model has to "how late in the cycle are we?"
- Simplified, validated weights — six weighted domains instead of a tangle of overlapping signals. Trend-following inputs (ETF flows, dominance, stablecoins) were demoted to context only, because they're good at confirming trends and bad at calling turns.
- Clearer language everywhere — the dashboard now says "Extreme Optimism" instead of "Blow-Off," "Maximum Fear" instead of jargon, and frames every signal flag as bearish or bullish rather than as a trade order.
- A validated backtest — every zone label on the dashboard now matches what the historical data actually showed (details below).
No crystal ball. No hype. Just the data, explained in plain language.
The Score at a Glance
The Risk Score is a contrarian cycle oscillator from 0 to 100:
Maximum fear. Historically the best long-term entries.
No edge either way. Let the signal develop.
Extreme optimism. Historically precedes corrections.
It answers one question: where are we in the Bitcoin cycle, and is the crowd too optimistic or too pessimistic right now? It is a blend of six weighted domains — heavily favoring on-chain cycle position and sentiment, the two families of signals that have historically marked tops and bottoms. The full breakdown is in the Engine Architecture section below.
Validated Historical Performance
We replayed the score across the full 2021–2026 history — 3,386 daily observations spanning a complete bull market, a brutal bear market, and the recovery — and measured what Bitcoin actually did in the 90 days after each reading. In that window the score ranged from roughly 18 to 91. Here is what the numbers say, in plain terms:
Bitcoin fell an average of 7.2% over the following 90 days, and finished lower 72% of the time. In other words: if you had reduced exposure near these readings, you would have sidestepped losses far more often than not. (355 observations)
Bitcoin gained an average of +9.4% over the following 90 days, and finished higher 63% of the time. Buying when the score said "fear" was historically rewarded. (444 observations)
All other readings averaged roughly +2.0% over 90 days. That's the benchmark the extremes are measured against — the sell zone underperformed it badly, and the buy zone beat it clearly. (2,674 observations)
⚠️ Honest caveat: these are in-sample results from one asset over one ~5-year window. 355 and 444 observations sound like a lot, but they cluster around a handful of market episodes, so treat the percentages as a directional guide — not a guarantee that the next cycle behaves the same way.
How to Use This
The score is a market-condition indicator, not a trading signal. It tells you what kind of environment you're in; what you do with that depends on your own strategy and time horizon. The seven bands:
- 0–22 · Capitulation: Maximum fear. Historically the highest-reward multi-month zone.
- 22–32 · Deep Value: Cheap by cycle measures. Strong multi-month risk/reward.
- 32–42 · Accumulation: Constructive base rates on a multi-month horizon.
- 42–58 · Neutral: No clear edge. Wait for the signal to develop.
- 58–70 · Elevated: Trend caution — not a sell. In the backtest this zone kept rising more often than not. Don't fight the trend; just tighten risk management.
- 70–80 · Distribution: The only band that historically preceded negative 90-day forward returns.
- 80–100 · Euphoria: Extreme-optimism territory. Capital preservation first.
One band deserves emphasis: 58–70 is not a sell signal. Earlier versions of risk models (ours included) treated anything above neutral as a warning. The data disagreed — bull markets spend long stretches in this zone while price keeps climbing. MK II labels it honestly.
Engine Architecture
The score is a weighted blend of six domains. The weights reflect what has historically mattered for calling cycle turns — not what's most popular on crypto Twitter. Higher weight = more influence on the final number.
1. On-Chain Cycle (38% weight)
The core of the model. The CBBI (Confidence Index) — a meta-index of 10+ on-chain metrics — plus 30-day price momentum tell us where we sit in the Bitcoin halving cycle. CBBI near its lows has historically been a generational buying opportunity; near its highs, a sign the cycle is peaking.
2. Sentiment — Fear & Greed (24% weight)
A pure contrarian signal. Extreme fear has historically marked bottoms; extreme greed has marked tops. The crowd is most wrong at the extremes — that's the entire premise of a contrarian model.
3. Cycle Position (16% weight)
New in MK II. The distance of price from the 200-week moving average and the drawdown from all-time highs measure how stretched the market is in either direction. Far above the long-term average = late-cycle risk; deep below it = washed-out value.
4. Derivatives Structure (15% weight)
Direction matters more than size here. Negative funding rates and backwardation mean traders are paying to be short — a sign of forced selling that often marks bottoms (bullish). Hot positive funding and a high futures premium mean leverage has piled into the long side — fragile and top-heavy (bearish).
5. Macro Liquidity (4% weight)
A slow backdrop tilt from Global M2 money supply, real 10-year yields, and the broad dollar index. Tight liquidity leans the score defensive; easy liquidity leans it constructive. Deliberately small — macro sets the weather, not the timing.
6. TradFi — VIX (3% weight)
Read contrarian: a VIX panic spike often coincides with capitulation bottoms across all risk assets, while extreme stock-market complacency tends to appear late in cycles.
Context-Only Inputs (0% weight)
ETF flows, BTC dominance, and stablecoin supply appear on the dashboard but do not move the score. They are trend-following by nature — excellent at confirming what's already happening, poor at calling turns. They inform; they don't decide.
Signal Flags Reference
When notable conditions appear, the engine raises informational flags — you'll see them as markers on the history chart and as a banner on the dashboard. They do not force the score (the weighted blend already reflects them); they confirm what the number is saying. Each flag describes a market condition, framed as bearish or bullish:
| Condition | Market Signal | Interpretation |
|---|---|---|
| CBBI ≥ 85 or Fear & Greed ≥ 85 | 🔴 Extreme Optimism | Bearish — overbought |
| Hot funding or high futures premium | 🟠 Leverage Peak | Bearish — over-leveraged |
| CBBI ≤ 15 or extreme drawdown | 🟢 Maximum Fear | Bullish — oversold |
| Negative funding or backwardation | 🔵 Capitulation Signal | Bullish — forced selling exhausted |
Context flags (🔻 ETF Outflows, 💧 Tight Liquidity, 🛡️ Defensive Rotation) may also appear; they describe the backdrop and carry no scoring weight. On the chart, amber markers = bearish conditions, blue markers = bullish conditions, and a ★ means several flags fired at once.
Data Sources
The engine refreshes every 3 hours from independent sources:
- On-Chain: CBBI (Confidence Index), daily price momentum
- Sentiment: Crypto Fear & Greed Index
- Cycle: 200-week moving average, all-time-high drawdown
- Derivatives: Funding rates, open interest, futures basis
- Macro: Global M2, 10-year real yield, broad dollar index
- TradFi: VIX
- Context: US spot Bitcoin ETF flows, BTC dominance, stablecoin supply
Important Disclaimers
This dashboard is a data-visualization tool for educational purposes. It is not financial advice. Past performance does not guarantee future results. The backtest above is in-sample; real-world conditions, fees, slippage, and your own behavior will differ. Always do your own research, and never risk money you can't afford to lose. This is a tool, not a crystal ball.
MaxMetrics Risk Engine MK II — maintained with ☕ and code.