Market Cap to Thermocap Ratio (M/T) is an indicator that represents the ratio between a cryptocurrency's market capitalization (market cap) and Thermocap. The Market Cap to Thermocap indicator is an indicator of the current market capitalization of Bitcoin compared to the total amount of USD spent by miners to mine Bitcoin and secure the network.
Thermocap represents the sum of block rewards and transaction fees paid to miners. The calculation of this ratio takes into account the increasing circulating supply over time.
The M/T ratio shows how much the cryptocurrency price is valued relative to its total cost (thermocap).
If the M/T ratio is high, meaning that the Market Cap is high relative to the Thermocap, it can often indicate that the cryptocurrency price is inflated or highly speculated.
If the M/T ratio is low, meaning the Market Cap is lower than the Thermocap, it could indicate that the cryptocurrency is potentially undervalued, or that investors see potential for higher profits.
How to Calculate?
The Market Cap to Thermocap formula is the market capitalization of Bitcoin divided by its total cost.
Market Cap to Thermocap Ratio (M/T) = Market Cap (market capitalization) / Thermocap (miner revenues)
Critical levels for Market Cap to Thermocap:
0.0000040 and below, 0.00000100, 0.00000200, 0.00000400 and above.
Below 0.0000040: Indicates that Bitcoin is significantly undervalued, and this zone represents a great buying opportunity for Bitcoin.
0.0000020 level: An important support and resistance point based on historical data.
0.00000400 and above: It can be assumed that Bitcoin is overvalued and price declines are possible from these levels.
During the Uprising:
0.0000040 above:
It can be considered that M/T broke out from the bottom and the uptrend continues. By interpreting that the value of Bitcoin has increased, the 0.00000100 level can be considered as resistance.
0.00000100 level:
When historical data is analyzed, it can be observed that this level works as resistance. In case the resistance is overcome, the continuation of the rise up to the 0.00000200 level can be considered possible.
0.00000200 level:
Analyzing historical data, it can be observed that this level has often worked as an important resistance point. If it is breached, it is considered possible for Bitcoin to reach new ATHs.
0.00000400 and above:
At this level, where M/T reaches its peak, it can be observed that Bitcoin's market capitalization is extremely high compared to Thermocap. This level and higher can be interpreted as a bull peak. At the same time, the selling pressure on Bitcoin can also be considered high.
During the Downturn:
Below 0.00000400:
It is observed that M/T broke out of the peak area and selling pressure was observed on Bitcoin.
0.00000200 level:
This level may work as support in the first phase as Bitcoin's market capitalization continues to decline. If the support breaks, the 0.00000100 journey may begin.
0.00000100 level:
Bitcoin's market capitalization is observed to be falling compared to Thermocap.
Historical data shows that this level has often worked as support. If this support is broken, Bitcoin's journey to the bottom may begin.
0.0000040 and below:
When M/T enters the bottom area, Bitcoin's market capitalization is extremely low compared to Thermocap. This area can be considered a great buying opportunity.
Historical data shows that Bitcoin purchases made while M/T is in this area bring big gains in the long run.
Market Cap to Thermocap Ratio (M/T) Score Critical Levels
Use of Market Cap to Thermocap (M/T) on Traderlands
You can start creatinga strategy by selecting the "Market Cap to Thermocap Ratio" indicator from the list of indicators.
The strategy prepared as an example is given in the visual. You can use the Market to Thermocap Ratio indicator by creating your own strategy in line with your research.
Backtest Results
1-year backtest result for BTC pair
1-year yield curve for the BTC pair
You can also set trend direction with Market Cap to Thermocap Ratio and create trading conditions with classic indicators.
Once you have created your own strategies, you can backtest them to evaluate their performance. You can access the Workshop menu for creating and backtesting strategies here.
WARNING: The entry and exit strategies in the images are prepared ONLY for educational purposes to explain how indicators work. It does not guarantee any profit.
When creating an algorithmic trading strategy, a rule set is usually created by using more than one indicator.
Citation:
#onchain #marketcapthermocapratio
