/custom-indicators

name: custom-indicators
description: Crypto-native indicators including NVT ratio, exchange flow, funding rate signals, holder momentum, and smart money flow

Custom Crypto Indicators

Why Standard TA Falls Short for Crypto

Traditional technical analysis was built for equities and forex — markets with fixed supply, regulated exchanges, and institutional-dominated order flow. Crypto markets have unique properties that demand purpose-built indicators:

• **On-chain transparency**: Every transaction is public. We can measure real

economic activity, not just price and volume on a single exchange.

• **Supply mechanics**: Fixed or programmatic supply schedules make

supply-side analysis (velocity, holder distribution) meaningful.

• **Derivatives dominance**: Perpetual futures funding rates and open interest

often drive spot price, not the other way around.

• **Whale concentration**: A small number of wallets hold outsized supply.

Tracking their behavior provides alpha that equity-market TA cannot.

• **Exchange flows**: On-chain deposit/withdrawal to centralized exchanges

signals intent to sell or accumulate.

This skill covers nine crypto-native indicators. Each section includes the formula, interpretation guide, data sources, and a working code snippet.

Files

| File | Description | |------|-------------| | `references/indicator_formulas.md` | Full formulas, parameter tables, signal ranges for all 9 indicators | | `references/signal_interpretation.md` | Composite scoring, divergence detection, false signal filtering | | `scripts/compute_crypto_indicators.py` | Computes all 9 indicators from free APIs or demo data | | `scripts/holder_momentum.py` | Holder count tracking with momentum signals |

---

Indicator 1: NVT Ratio

**Network Value to Transactions** — the crypto equivalent of a P/E ratio.

NVT = Market Cap / Daily On-Chain Transaction Volume (USD)

• **High NVT (> 65)**: Network is overvalued relative to its economic

throughput. Bearish signal.

• **Low NVT (< 25)**: Network is undervalued or seeing heavy real usage.

Bullish signal.

• **Data sources**: CoinGecko (market cap), blockchain explorers or

DeFiLlama (transaction volume).

def nvt_ratio(market_cap: float, daily_tx_volume_usd: float) -> float:
    """Compute NVT ratio.

    Args:
        market_cap: Current market capitalization in USD.
        daily_tx_volume_usd: 24h on-chain transaction volume in USD.

    Returns:
        NVT ratio value.
    """
    if daily_tx_volume_usd <= 0:
        return float("inf")
    return market_cap / daily_tx_volume_usd

**Smoothing**: Apply a 14-day or 28-day moving average to NVT (called NVT Signal) to reduce noise from daily volume spikes.

---

Indicator 2: MVRV Ratio

**Market Value to Realized Value** — compares the current market cap to the aggregate cost basis of all holders.

MVRV = Market Cap / Realized Cap
Realized Cap = Sum of (each UTXO * price when it last moved)

• **MVRV > 3.5**: Most holders are in deep profit. Distribution likely.
• **MVRV < 1.0**: Most holders are underwater. Historically marks bottoms.
• **Data sources**: Glassnode, CryptoQuant (Bitcoin/Ethereum). For Solana

tokens, approximate via average entry price of top holders.

def mvrv_ratio(market_cap: float, realized_cap: float) -> float:
    """Compute MVRV ratio.

    Args:
        market_cap: Current market capitalization in USD.
        realized_cap: Realized capitalization (aggregate cost basis).

    Returns:
        MVRV ratio value.
    """
    if realized_cap <= 0:
        return float("inf")
    return market_cap / realized_cap

For tokens without UTXO-based realized cap, estimate using average purchase price from DEX trade history multiplied by circulating supply.

---

Indicator 3: Exchange Flow

**Net exchange deposits minus withdrawals** — signals selling or accumulation intent.

Exchange Netflow = Deposits to Exchanges - Withdrawals from Exchanges

• **Positive netflow (large deposits)**: Holders moving tokens to exchanges,

likely to sell. Bearish.

• **Negative netflow (withdrawals)**: Tokens leaving exchanges to cold

storage. Bullish accumulation signal.

• **Data sources**: CryptoQuant, Glassnode. For Solana SPL tokens, track

transfers to known exchange wallets via Helius or Solana RPC.

def exchange_netflow(
    deposits_usd: float, withdrawals_usd: float
) -> tuple[float, str]:
    """Compute exchange netflow and interpret.

    Returns:
        Tuple of (netflow_value, signal_label).
    """
    netflow = deposits_usd - withdrawals_usd
    if netflow > 0:
        signal = "bearish"
    elif netflow < 0:
        signal = "bullish"
    else:
        signal = "neutral"
    return netflow, signal

Normalize by market cap for cross-token comparison: `Netflow Ratio = Netflow / Market Cap`.

---

Indicator 4: Funding Rate Signal

Perpetual futures contracts use funding rates to anchor price to spot.

Funding Rate = (Perp Mark Price - Spot Price) / Spot Price
             (paid every 8 hours on most exchanges)

• **Highly positive (> 0.05%)**: Longs pay shorts. Market is overleveraged

long. Contrarian bearish.

• **Highly negative (< -0.05%)**: Shorts pay longs. Overleveraged short.

Contrarian bullish.

• **Data sources**: Binance, Bybit, dYdX APIs. Aggregate across exchanges

for a volume-weighted average.

def funding_rate_signal(
    rates: list[float], weights: list[float] | None = None
) -> tuple[float, str]:
    """Volume-weighted average funding rate with signal.

    Args:
        rates: Funding rates from multiple exchanges.
        weights: Optional volume weights per exchange.
    """
    import numpy as np

    if weights is None:
        weights = [1.0 / len(rates)] * len(rates)
    vw_rate = float(np.average(rates, weights=weights))
    if vw_rate > 0.0005:
        signal = "bearish"
    elif vw_rate < -0.0005:
        signal = "bullish"
    else: