GlossaryEnergy Value Oscillator
Energy Value Oscillator
The Energy Value Oscillator measures how far the Bitcoin price is above or below its energy value, in percent. The energy value converts the energy the network spends on issuing new bitcoin into a dollar value. Deep readings below it have historically coincided with favorable phases, very high readings above it with overheated ones.
Zones
| Zone | Range | Color |
|---|---|---|
| Extremely overvalued | from +120% | red |
| Overvalued | +40 to +120% | orange |
| Above energy value | 0 to +40% | blue |
| Below energy value | −40 to 0% | light green |
| Undervalued | below −40% | green |
Reference lines are at −40, 0, +40 and +120%, and the zero line is bold. Above +120% and below −40%, the background is tinted.
How to read it
- Zero means the price equals the energy value. Above it the market pays more than the energy basis supports, below it less.
- Below −40%, the price has historically been in phases when miners were under pressure and accumulating paid off.
- Above +120%, the market was overheated. How long it stays there matters more than the touch: short excursions into the zone are common in strong trends.
- The oscillator is smoothed twice and therefore reacts a few days after the price.
Limitations
- Bitcoin only. The energy value is based on Bitcoin's hashrate and circulating supply; on other symbols, the study is not available in the menu.
- The efficiency table ends in April 2023. Newer hardware is more economical, so the energy input and with it the energy value tend to be set too high on recent candles. The oscillator therefore tends to read too low there, meaning too “cheap”.
- The fiat factor, lost coins and inflation factor are model assumptions. Other values shift the zones considerably.
- The curve only begins once one year of circulating supply is available. Meant for 1D to 1W.