CBBI Rainbow Approximation (BTC Only)# CBBI Rainbow Approximation
## Overview
This indicator is a Pine Script **approximation inspired by the ColinTalksCrypto Bitcoin Bull Run Index (CBBI)** methodology. It is **not** the official CBBI and does not claim to reproduce its behavior — it follows the same general philosophy of combining multiple complementary valuation metrics into a single 0–100 confidence score, but uses a different set of inputs adapted to what is computable directly in Pine Script.
The original CBBI relies on 9 on-chain metrics (RHODL Ratio, Reserve Risk, Terminal Price, etc.) that are not available in Pine Script. This script substitutes those with 6 widely studied technical metrics and packages them into a single rainbow-colored oscillator for cycle context.
## Why a Composite Index Rather Than Individual Metrics
Each Bitcoin valuation metric has known weaknesses when used in isolation:
- The **Mayer Multiple** can stay elevated for months during strong bull runs without marking a top
- The **Pi Cycle Top** has fired only a handful of times historically — small sample size
- The **200-Week MA** is too slow to react during fast cycles
- The **Monthly RSI** is purely momentum-based with no valuation anchor
- The **Power Law** ignores cyclical behavior entirely
- The **Golden Ratio Multiplier** depends heavily on calibration
A composite score smooths out the individual weaknesses by requiring **broad agreement** across different methodological families before signaling a cycle extreme. A single metric flashing red is a weak signal; five or six aligning is a stronger one.
## Why These 6 Metrics Specifically
The metrics were chosen so that each one measures a **different dimension** of the market cycle, minimizing redundancy:
| Metric | Dimension Measured | Time Horizon |
|---|---|---|
| Mayer Multiple | Price extension above baseline | Medium term (200d) |
| Pi Cycle Top | Trend acceleration / MA convergence | Medium-long term |
| 200-Week MA Heatmap | Distance from multi-year support | Very long term |
| Golden Ratio Multiplier | Fibonacci-based cycle expansion | Long term |
| Monthly RSI | Pure momentum, no MA dependency | Macro |
| Power Law Regression | Log-log valuation anchor (no MA) | All-history |
Four of the six rely on moving averages of different lengths (111, 200, 350, 1400 days), but each one transforms that information in a structurally different way (ratio, crossover convergence, distance, multiplier band, regression). The remaining two (RSI, Power Law) intentionally bypass moving averages entirely to avoid over-weighting MA-based behavior.
## How the Score Is Built
1. Each metric is computed in **daily timeframe** (regardless of the chart's display timeframe)
2. Each metric is normalized to a **0–100 scale** based on its historical extremes
3. Available metrics are averaged into a raw composite score
4. The raw score is smoothed by a configurable SMA (default: 7 days)
When some metrics return NaN (e.g. the 200-week MA before mid-2014 because Bitcoin lacked the historical data), the script averages only the available ones. The "Metrics OK: X/6" cell in the info table shows how many metrics contributed to the current score.
## Rainbow Zones
The score is plotted against six color-coded zones derived from historical CBBI patterns:
- **0–20 (Blue)** — Capitulation: extreme value, historical accumulation zones
- **20–40 (Cyan)** — Accumulation: still undervalued
- **40–60 (Green)** — Neutral: fair value range
- **60–75 (Yellow)** — Bullish: trending toward overheated
- **75–85 (Orange)** — Overheated: caution advised
- **85–100 (Red)** — Blow-off Top: historical sell zones
Triangle markers print automatically when the score crosses 85 upward (probable top) or 15 downward (probable bottom).
## Multi-Timeframe Behavior
A common issue with Bitcoin cycle indicators is that switching from daily to weekly or monthly view distorts moving-average-based metrics. To prevent this, **all six metrics are computed in daily resolution via a single grouped `request.security` call**, regardless of the timeframe shown on the chart. The score therefore stays consistent whether you view it on the 1D, 1W, 1M, or higher timeframes — the line you see is always the daily score.
## Key Features
- 6 normalized metrics combined into a 0–100 composite score
- Multi-timeframe consistent (calculations forced to daily)
- Safe NaN handling for early Bitcoin history
- Live metrics table showing each component's contribution
- Built-in alerts for top (>85) and bottom (<15) crossovers
- Toggleable rainbow bands, score line, signals, and table
## How to Use
1. Apply the indicator to a Bitcoin chart (default symbol: `INDEX:BTCUSD`)
2. View on any timeframe — the score is computed in daily and remains consistent
3. The score entering the red zone (>85) historically aligns with cycle peaks
4. The score entering the blue zone (<20) historically aligns with cycle bottoms
5. Use as macro cycle context, not as a short-term timing tool
## Important Notes
- **This is not the official CBBI.** It is an open-source approximation. The official CBBI is maintained at colintalkscrypto.com and uses proprietary on-chain data feeds not accessible from Pine Script.
- **Past patterns may not repeat.** The thresholds and metric calibrations are based on Bitcoin's prior cycles. Future cycle behavior may differ as the market matures.
- **This is not financial advice.** The indicator provides cycle context only. Always combine multiple tools and conduct your own research before making investment decisions.
- **Not suitable for short-term trading.** The metrics are macro by design and update slowly.
## Credits
Conceptual inspiration from **Colin Talks Crypto** for the original CBBI methodology of combining multiple valuation metrics into a composite confidence score. Individual metrics (Mayer Multiple, Pi Cycle Top, 200-Week MA Heatmap, Golden Ratio Multiplier) are well-known public-domain Bitcoin cycle tools, none of which are reproduced from any specific TradingView script.
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