Bitcoin Thermocap [InvestorUnknown]

The Bitcoin Thermocap indicator is designed to analyze Bitcoin's market data using a variant of the "Thermocap Multiple" concept from BitBo. This indicator offers several modes for interpreting Bitcoin's historical block and price data, aiding investors and analysts in understanding long-term market dynamics and generating potential investing signals.

Key Features:

1. Thermocap Calculation

• The core of the indicator is based on the Thermocap Multiple, which evaluates Bitcoin's value relative to its cumulative historical blocks mined.
  
• Thermocap Formula:
  

Source: Bitbo

btc_price                       = request.security("INDEX:BTCUSD", "1D", close)
BTC_BLOCKSMINED                 = request.security("BTC_BLOCKSMINED", "D", close)

// Variable to store the cumulative historical blocks
var float historical_blocks     = na

// Initialize historical blocks on the first bar
if (na(historical_blocks))
    historical_blocks           := 0.0

// Update the cumulative blocks for each day
historical_blocks               += BTC_BLOCKSMINED * btc_price

// Calculate the Thermocap
float thermocap                 = ((btc_price / historical_blocks) * 1000000) // the multiplication is just for better visualization

2. Multiple Display Modes:
The indicator can display data in four different modes, offering flexibility in interpretation:

• RAW: Displays the raw Thermocap value.
  
• LOG: Applies the logarithm of the Thermocap to visualize long-term trends more effectively, especially for large-value fluctuations.
  
• MA Oscillator: Shows the ratio between the Thermocap and its moving average (MA). Users can choose between Simple Moving Average (SMA) or Exponential Moving Average (EMA) for smoothing.
  
• Normalized MA Oscillator: Provides a normalized version of the MA Oscillator using a dynamic min-max rescaling technique.
  

3. Normalization and Rescaling

• The indicator normalizes the Thermocap Oscillator values between user-defined limits, allowing for easier interpretation. The normalization process decays over time, with values shrinking towards zero, providing more relevance to recent data.
  
• Negative values can be allowed or restricted based on user preferences.
  

f_rescale(float value, float min, float max, float limit, bool negatives) =>
    ((limit * (negatives ? 2 : 1)) * (value - min) / (max - min)) - (negatives ? limit : 0)

f_max_min_normalized_oscillator(float x) =>

    float oscillator             = x
    var float min                = na
    var float max                = na

    if (oscillator > max or na(max)) and time >= normalization_start_date
        max := oscillator

    if (min > oscillator or na(min)) and time >= normalization_start_date
        min := oscillator

    if time >= normalization_start_date
        max := max * decay
        min := min * decay

    normalized_oscillator        = f_rescale(x, min, max, lim, neg)

Usage
The Bitcoin Thermocap indicator is ideal for long-term market analysis, particularly for investors seeking to assess Bitcoin's relative value based on mining activity and price dynamics. The different display modes and customization options make it versatile for a variety of market conditions, helping users to:

• Identify periods of overvaluation or undervaluation.
  
• Generate potential buy/sell signals based on the MA Oscillator and its normalized version.
  

By leveraging this Thermocap-based analysis, users can gain a deeper understanding of Bitcoin's historical and current market position, helping to inform investment strategies.