The MarketVector™ Crypto Heat Index is a proprietary, rules-based sentiment indicator designed to quantify market dynamics through breadth and trend participation. Unlike legacy measures such as the Fear & Greed Index, the Crypto Heat Index integrates multiple structural components into a single composite signal. By embedding SMA-based trend filters and percentile thresholds directly into the index, the Heat Index produces systematic rebalancing signals that can be used within institutional asset allocation frameworks. Empirical backtests demonstrate the potential for enhanced risk-adjusted returns, with the Heat Strategy historically outperforming a quarterly rebalanced benchmark by approximately 10% in annualized CAGR.
This whitepaper introduces the methodology, compares it to existing sentiment tools, and presents a framework for systematic allocation strategies.
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