Bitcoin Gold Fair Value Model | AlphaNatt

16 hours ago

Bitcoin Gold Fair Value Model | AlphaNatt

Advanced regression-based projection model inspired by RJ Alpha's pioneering research on gold-bitcoin correlations

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OVERVIEW

This indicator implements a quantitative fair value model that establishes and tracks the mathematical relationship between Bitcoin and Gold prices. Through continuous regression analysis over a rolling 1000-day window, the model projects Bitcoin's expected price 65 days into the future based on current gold valuations.

Important Attribution: This model is directly inspired by and based on the groundbreaking analytical work of RJ Alpha, who discovered and documented the leading correlation between gold price movements and subsequent Bitcoin valuations. RJ Alpha's original research identified the approximate 65-day lead time that forms the foundation of this indicator.

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WHAT THE MODEL SHOWS

Visual Components:

• []Cyan projection line extending 65 days forward from current date
  []Pink line showing current fair value based on today's gold price
  []Statistical table displaying confidence intervals and correlation strength
  []Price target label with exact projected value and timeframe
  

Statistical Outputs:

1. []1-Standard Deviation Range: The 68% probability zone where price is statistically likely to trade
   []65-Day Price Projection: The model's central estimate for Bitcoin price based on current gold valuation
   []95% Confidence Interval: The wider range capturing nearly all probable price outcomes
   []R² Correlation Score: Real-time measurement of model reliability (0 = no correlation, 1 = perfect correlation)
   

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HOW THE MODEL WORKS

The indicator performs several key calculations:

• []Collects 1000 days of historical price data for both Bitcoin and Gold
  []Calculates linear regression coefficients (alpha and beta) between the two assets
  []Establishes the mathematical relationship: BTC = α + β(Gold)
  []Projects forward 65 days using current gold price as input
  []Calculates standard error to determine confidence intervals
  []Updates all calculations with each new daily close
  

The 65-day lead time represents the historical average lag between gold price movements and corresponding Bitcoin price adjustments, as discovered in RJ Alpha's original research.

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INTERPRETATION GUIDE

Reading the Projection:

• []Projection Above Current Price: Model suggests potential upward movement over next 65 days
  []Projection Below Current Price: Model indicates possible downward pressure ahead
  []Widening Confidence Bands: Increased uncertainty in projection, lower conviction
  []Narrowing Confidence Bands: Higher model confidence, stronger conviction
  

Understanding R² Values:

• []R² > 0.70: Very strong correlation - high confidence in projections
  []R² 0.50-0.70: Moderate correlation - reasonable predictive power
  []R² 0.30-0.50: Weak correlation - use with additional confirmation
  []R² < 0.30: Poor correlation - model temporarily unreliable
  

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PRACTICAL APPLICATIONS

For Trend Analysis:[

1. []Monitor projection direction changes as early trend reversal signals
   []Use deviation from projection to identify overbought/oversold conditions
   []Track R² score to gauge when model is most reliable
   []Compare multiple timeframe projections for confluence
   

For Risk Management:

1. []Use confidence intervals to set realistic profit targets
   []Identify zones where price might face resistance or support
   []Adjust position sizing based on model confidence (R² score)
   []Monitor extreme deviations as potential mean reversion opportunities
   

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TECHNICAL SPECIFICATIONS

• []Regression Window: 1000 days (approximately 3 years of trading data)
  []Projection Period: 65 days forward
  []Update Frequency: Daily at market close
  []Data Requirements: Minimum 50 days of data to begin calculations
  []Gold Data Source: TVC:GOLD daily prices
  []Statistical Method: Ordinary Least Squares (OLS) regression
  

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IMPORTANT CONSIDERATIONS

Model Limitations:
This indicator is based on historical correlations which can and do change over time. The relationship between gold and Bitcoin is influenced by numerous macroeconomic factors including monetary policy, inflation expectations, and market sentiment. The model performs best during periods of stable correlation and may produce less reliable signals during correlation regime changes.

Best Practices:

• []Use on daily timeframe for optimal accuracy
  []Apply to major Bitcoin pairs (INDEX:BTCUSD recommended)
  []Combine with other technical and fundamental analysis
  []Monitor R² score before making trading decisions
  []Be aware that correlations can break down during black swan events
  

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VERSION NOTES

• []Pine Script Version 6
  []Automatic gold price fetching from TVC:GOLD
  []Real-time statistical calculations
  []Clean visual design with cyan/pink color scheme
  

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CREDITS & ACKNOWLEDGMENTS

This indicator would not exist without the pioneering research of RJ Alpha, who inspired this indicator. The 65-day projection period and core methodology are based directly on RJ Alpha's original analytical framework.

Coded and maintained by AlphaNatt
Visual design and implementation by AlphaNatt
Based on research and methodology by RJ Alpha

RJ Alpha Twitter: x.com/Rob_Jones19
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DISCLAIMER

This indicator is for informational and educational purposes only. It should not be considered financial advice. Past performance and historical correlations do not guarantee future results. Always conduct your own research and consider multiple factors before making trading decisions.

41 minutes ago

Release Notes

Minor Adjustment to UI