AVS Average Analysis
The AVS (Averaged Value Scoring) Average indicator provides a comprehensive view of Bitcoin's valuation by combining multiple technical indicators into a single normalized score. This heatmap visualization helps identify market cycle phases and potential turning points.
Understanding AVS Average
What is AVS Average?
The AVS Average combines multiple valuation metrics, technical indicators, and market sentiment signals into a single averaged score. By normalizing and weighting different market indicators, it provides a holistic view of whether Bitcoin is relatively overvalued or undervalued within the current market cycle.
Heatmap Interpretation
The heatmap uses color gradients to visualize valuation levels over time. Cooler colors (blues and greens) indicate undervalued conditions that have historically preceded significant rallies, while warmer colors (oranges and reds) suggest overvalued conditions that often coincide with market tops or corrections. The intensity of the color reflects the strength of the signal.
Market Cycle Application
During bull markets, the AVS Average gradually transitions from cool to warm colors as valuations expand. In bear markets, the reverse occurs as the indicator moves back toward undervalued territory. The upper panel shows Bitcoin's price action, while the lower panel displays the corresponding AVS heatmap, making it easy to correlate price movements with valuation changes.
Trading Strategy
Traders use AVS Average to inform position sizing and timing decisions. Extended periods in cold zones may indicate accumulation opportunities, while sustained warm/hot readings can signal reduced risk-reward ratios. The indicator works best when combined with trend analysis and other momentum indicators to confirm entry and exit points.