How Indicators Work

This page explains the methodology behind each market indicator. Understanding how they're calculated helps you use them more effectively.

Fear & Greed Index

The Fear & Greed Index measures overall crypto market sentiment on a 0-100 scale.

Data Sources

We aggregate data from multiple sources:

Calculation

1. Each factor is normalized to a 0-100 scale
2. Weighted average produces the final index
3. Updated every few hours

Interpretation

Contrarian use: Many traders buy during Extreme Fear and reduce exposure during Extreme Greed.

Altcoin Season Index

Measures whether altcoins or Bitcoin is leading the market.

Methodology

1. Track the top 50 altcoins by market cap (excluding stablecoins)
2. Compare each altcoin's 90-day performance to Bitcoin's
3. Count how many altcoins outperformed BTC

Calculation

Altcoin Season Score = (Outperformers / Total Altcoins) × 100

If 40 out of 50 altcoins outperformed Bitcoin → Score = 80 (Altseason)

Interpretation

Historical Patterns

• Bull market peaks often see extreme Altseason readings
• Bear market bottoms often see extreme BTC Season
• Early bull markets typically start with BTC Season

BTC Dominance

Bitcoin's percentage share of the total cryptocurrency market cap.

Calculation

BTC Dominance = (Bitcoin Market Cap / Total Crypto Market Cap) × 100

Example: If Bitcoin is worth $1T and total crypto is $2T → Dominance = 50%

Data Source

Real-time market cap data aggregated from major exchanges and data providers.

Interpretation

Historical Context

• 2017 peak: Fell below 35% during ICO mania
• 2018-2019 bear: Rose above 70%
• 2021 peaks: Dropped to ~40% during altcoin rallies
• 2022-2026: Steady climb from ~40% back toward 60%
• Current (Feb 2026): ~58-60%

Note: BTC dominance fluctuates. Check CoinGecko for current values.

Contrarian Index

BlockMind's proprietary indicator for identifying potential market turning points.

Methodology

The Contrarian Index combines leverage and positioning data to detect crowded trades:

Inputs:

1. Aggregated Open Interest (OI) — Total value of outstanding futures contracts
2. Long/Short Ratio — Binance trader positioning data
3. Funding Rates — Cost of holding leveraged positions

Calculation Process

1. Calculate z-scores for each input (standard deviations from mean)
2. Weight and combine z-scores
3. Transform to 0-100 scale using: 50 + 50 × tanh(z-score / 1.25)

Why Z-Scores?

Z-scores normalize data across different magnitudes, allowing us to compare:

• "OI is 2 standard deviations above average"
• "Long/short ratio is 1.5 standard deviations below average"

Interpretation

Key insight: Unlike Fear & Greed (which is directional), the Contrarian Index is specifically designed for contrarian trading — extreme readings suggest potential reversals.

Data Quality & Limitations

What We Do Well

• Multiple data sources — No single point of failure
• Regular updates — Indicators refresh throughout the day
• Historical context — 30+ days of history for trend analysis
• Transparent methodology — You know what you're looking at

Limitations

1. Lagging indicators — By definition, sentiment follows price
2. Not predictive — These measure current state, not future direction
3. Can stay extreme — Markets can remain "irrational" for extended periods
4. Data source changes — API updates can temporarily affect readings

Best Practices

1. Use multiple indicators — Don't rely on any single metric
2. Consider timeframes — Daily noise vs weekly trends
3. Combine with your analysis — Indicators inform, not dictate
4. Watch for divergences — When indicators disagree, dig deeper

Data Sources

BlockMind aggregates data from multiple providers:

Update Schedule

Further Reading

• Market Overview — How to use the Market page
• DeepDive Analysis — Token-specific insights
• Interpreting Reports — Making sense of data