BSI – A Bitcoin Indicator from Ivan on Tech
On Black Friday, I got an email from Mr. Atomic Clock himself – Ivan on Tech. He was promoting a discount on his newly developed crypto-related indicator named BSI (Bitcoin Strength Indicator). A special black-Friday-only offer for the new BSI indicator would give me access at a discounted price of $397 /year compared to the regular price of $697 /year. It seemed like a great deal, so I took Ivan up on the offer. Here is a short description of BSI (taken from their website):
BSI – Win In The Next Bull Market
Now you have the chance to get your hands on Ivan on Tech’s own BSI indicator. BSI is a revolutionary, one-of-a-kind indicator combining both technical analysis and on-chain analysis using data from the Bitcoin blockchain.
With BSI, you get an EXCLUSIVE insight into the crypto market, making it possible for you to act before everyone else.
When you buy BSI today, you get access to all 3 BSI components 👇
BSI On-chain Sentiment
BSI Short-Term Trend
BSI Cloud
Make sure that you get the most out of the next bull market, a potentially life-changing event. Get BSI Today!
It all sounded very promising, so I was excited.
Price: $897 / year (“normal” price $1,697 /year)
Refund period: 7 days
Creator: Ivan on Tech
Platform: Tradingview
So we have covered the price point. If you plan to purchase BSI, you can pay by credit card, PayPal, or with crypto. There is a refund period of 7 days. You get seven days to play around with the indicator, and if you aren’t pleased, you can ask for a refund. After you pay for the indicator, you will need to send an email to Ivan on Tech support, with your tradingview username, for them to propagate BSI to your tradingview account. A free tradingview account will do just fine. There is no need for a paid tradingview subscription to utilize BSI. After you have sent your username to Ivan on tech support, it can take up to 24 hours before the indicator is added to your account. Once added to your account, you can find it on tradingview in the “indicators and strategies” section under “invite-only scripts”.
BSI Indicator
What exactly is the BSI indicator? I am not sure what the acronym is short for, but It is short for Bitcoin Strength Indicator and it is a proprietary indicator developed by the team behind Ivan on Tech. Ivan is notorious for his daily youtube videos posted at precisely the same time every day – like an atomic clock (almost 🙂 ). He is also the founder of Ivan on Tech Academy, an online course in the blockchain and crypto programming space.
The BSI indicator is an indicator specifically made for bitcoin (but can be used on any asset available on tradingview), and will show you:
On-chain Sentiment
Know what’s going on on-chain, before it plays out in the chart.
Short Term Trend
See when the short term trend switches direction. The lines can be used as support & resistance.
Cloud
Find long term support in a bull market, and identify when the long term trend shifts.
In addition to this, you also get a 30 page BSI manual.
Here is what it looks like in action. (click the image for full size)
BSI Indicator is not…
The BSI indicator is not a strategy. Like I mentioned in the market god review, the BSI indicator is precisely that – an indicator. It is not a strategy. As the name implies, an indicator will indicate where the price may be going in the nearest future. An indicator is an alternative reflection of price that some may find easier to decipher than the price itself. With that being said, any indicator, along with the BSI indicator, will not tell you exactly when to enter trades, how much of a loss you should accept, when you should take profit, etc. But it (the BSI indicator) will give you an indication of all these points.
It is up to you to find the optimal way to utilize this information. That may be easy and of great help. Maybe it will be difficult and clutter your decision process even more. Because of this, it isn’t easy to give a fair review/rating to an indicator.
I think it’s very fair to say that the most crucial aspect is how an indicator is utilized. There are, of course, some indicators that are more reliable than others. So is BSI one of them? Let’s take a closer look to find out.
On-Chain sentiment
On-chain sentiment is the first-mentioned part of the BSI indicator. This part is shown below your tradingview graph/candlesticks as long vertical lines in color variations from light red to dark red and light green to dark green. But let’s first talk about on-chain analysis, which is the foundation for the on-chain sentiment indicator. (click the image below for a full size)
On-Chain Analysis is a new type of analysis that traders and investors have never seen before now. Until the inception of bitcoin, any trading related analysis has either been categorized as fundamental analysis or technical analysis. On-chain analysis ticks the third box. On-chain analysis is the process of analyzing all the different elements on the blockchain to generate clues as to what the price may do in the nearest future.
There is a good article Sid Shekhar over on MasterTheCrypto.com where he writes the following:
First off, what do we mean by on-chain data? To put it succinctly: All data that is natively stored on the blockchain.
This data includes (but is not limited to):
Details of every block (timestamp, gas price, miner, block size etc.)
Details of every transaction (The ‘from’ and ‘to’ addresses, the amount transferred in the transaction etc.)
Smart contract invocation and usage
In other words, the on-chain transaction volume is being used to judge whether a given cryptoasset is actually being used.
We believe we can go one level deeper.
Instead of just crudely measuring the overall usage of a cryptoasset network, we think we can use on-chain transaction data to figure out who are the entities that are actually using a given cryptoasset.
This allows us to examine and learn from their on-chain transaction patterns – leading to deeper and more nuanced insights to fundamentally value the cryptoasset in question.
I don’t know what the on-chain sentiment from the BSI indicator shows, exactly. Still, I got a feeling it is related to comparing the value of the network with the volume of transactions recorded on the blockchain – NVT. In this article from Interdax they write the following:
By comparing the value of the network with the volume of transactions recorded on the blockchain, we can identify when a cryptocurrency is overvalued. When the value of the network is not justified by the volume of transactions, the NVT ratio is relatively high. When considering the transaction volume, if the network value is unusually low then it may suggest that a higher valuation is justified. The NVT ratio is often compared with the Price-Earnings ratio for equities and is applied in a similar way to find coins to buy, hold or sell
I have tried to compare a freely available NVT indicator on tradingview with the vertical lines from the on-chain sentiment data from the BSI indicator. There seems to be at least some overlap here. But there are also quite a lot of places where they differ. Which one is most accurate? Once again, that comes down to how the indicator is used. Click on the image below to see a comparison of the BSI On-Chain Sentiment and the NVT Signal With RMA and thresholds indicator (which is free on tradingview)
There is also an interesting article over on the Ivan on Tech blog about the topic of on-chain analysis. It also covers a bit about NVT but also a couple of other interesting points;
Unspent Transaction Outputs (UTXOs)
Realized Capitalization
Market Value to Realized Value (MVRV)
So called “on-chain analysis” is an emerging field in crypto, designed to help traders enhance their strategies. By leveraging information found on the public blockchain, on-chain analysts hope to better predict future market moves. These analysts scrutinize blockchain data such as transaction details, block details, and smart contract info to gain valuable insights.
My best guess is that the On-Chain sentiment in the BSI Indicator is using a combination of all the elements mentioned above.
So let’s get back to the BSI indicator. In the On-chain sentiment, green indicates the price is about to bottom out, and you should expect the price to start going up. Red suggests that price is about to reach a peak, and you should expect the price to start going down. The colors go from light to dark red and light to dark green. A darker color suggests a higher likelihood for the signal to be valid. Another note is that the color is only visible on the daily timeframe. It simply won’t be visible on the chart on lower timeframes.
My personal experience with the On-Chain sentiment is minimal, as it simply hasn’t flashed any colors on the chart since I applied the indicator. However, I looked at some historical examples, and if we go back to 2017 for the all-time high around 20K, it started to flash a dark red color 13 days before the all-time high was reached. So the signal was valid, but it was 13 days early.
The On-Chain sentiment is not an indicator for short-term daytraders, but it may prove valuable for swing traders. It is also apparent that you don’t want to execute trades solely based on the on-chain sentiment, but it may be a useful tool for an existing strategy. The way I currently use this is in the following simple manner; there is currently no indication on the on-chain sentiment- hence I would expect any rapid and extensive move to the downside to be shortlived moves that will make retail traders panic sell, but ultimately go back up within a relatively short period. So far, this has worked very well over the last couple of weeks. Will it continue? Time will tell.
BSI Short Term Trend
See when the short term trend switches direction. The lines can be used as support & resistance.
This is probably my favorite part of the indicator. It consists of four parts; support levels, resistance levels, bullish flags, and bearish flags. The BSI Short term trend works on all timeframes and seems very reliable, especially on higher timeframes. In works in the following manner; when a bullish flag is posted on the chart, a dynamic support level is listed below the price and will continue to develop as new candles are mapped. If there is enough momentum to push the price down through the support level and close a candle below it, a bearish flag is posted, and a dynamic resistance level is posted above the price.
On tradingview you can download chart data, and if you have the BSI indicator activated, this is reflected in the file (the time and price level of where the bullish and bearish flags are posted). This allows for easy (but limited) backtesting without the need to code a strategy in tradingview. With some relatively simple excel work, we can get an idea of how well this indicator works. I am currently working on this and will follow up with a new post, once I have something interesting to share.
For now, I will stick to what I have seen from a chart perspective – and it looks promising. On a 5-minute timeframe, you will get many bad entries – especially when you include financing fees and funding charges. But once we move to higher timeframes, these levels seem quite accurate, especially on the hourly timeframe and up.
As with any indicator, one thing to note is that you can, and will, get conflicting signals on different timeframes. Very often will the 1-hour timeframe show a bullish signal, while the 4-hour will be bearish. Which one do you go with? This is where the strategy part comes into play. You need to develop a strategy, and stick to it. The short version is that if you execute a trade based on the 4-hour timeframe, risk management should reflect this. The same is true for any other timeframe.
I think some clients of the BSI indicator will be tempted to go with a simple strategy like the following: Long at the print of a bullish flag, and short at the print of a bearish flag. From the looks of the chart on the 4-hour time frame, this could work. But you need to develop a plan as to where you will stop the trade out and where you will take profit. If you plan to reverse the trade at the next signal, you will need to work with a dynamic stop loss and take profit level, which poses a bunch of new issues from a risk management perspective.
Simple Strategy Suggestion with BSI
Suppose I was to go with a strategy somewhat similar to the above. In that case, I would prefer to go with a fixed stop-loss around 300 USD above or below the first print of the new support/resistance level and take profit at chart patterns indicating a possible reversal. The stop loss would, per definition, be dynamic, but only if the trade moves into profit territory (trailing the SL, that is). If the trade moves into negative territory, stop-loss will remain at the same level (due to the nature of the BSI Short term trend). A strategy like this would help catch the big trends, avoid lots of bad entries because of the higher timeframe, and be cheap from a commission perspective. However, we may end up getting in a bit late, as we need to wait for the close of a candle to get a valid signal. If we get in at the close of a momentum move, we should expect the first period to take us into a preliminary loss (because pullbacks are expected after a momentum move to either side). This is, of course, something that should be tested with a demo account before going live. Finetuning is without a doubt needed, but I do see how something like this could work.
Another way to trade with the BSI indicator is simply to trade all the bounces on the support and resistance levels on the 1-hour timeframe with a fixed stop above or below the printed support or resistance level at the time of entry. From the look of the charts, this seems to provide very accurate entry points.
Keep in mind; this is nothing more than support and resistance levels. There are lots of free alternatives on tradingview, or you could draw your very own levels. With that being said, BSI indicator does seem to print levels with significance that often makes the price bounce right at the posted levels. I am personally a big fan. But everyone has their favorite. I have gone through the top 20 free support and resistance indicators on tradingview, and in my opinion, none of them comes close to the accuracy provided by the BSI indicator.
BSI Cloud
Find long term support in a bull market, and identify when the long term trend shifts.
Finally, we have the BSI cloud part of the BSI indicator. BSI Cloud is another support & resistance indicator. BSI Cloud is not shown as a line but rather an area that looks somewhat like a cloud on the chart. BSI Cloud is visible on all timeframes, but we are told that this is to be used on larger timeframes (and based on the examples in the guide, the daily chart is the one to go with). Based on what I have seen on the charts this far, I would prefer to utilize this on the 4-hour timeframe. BSI Cloud seems to be particularly useful when we see quick sudden strong moves (especially to the downside). There are many historical examples of sharp and large spikes down, where the price comes right down to the BSI Cloud area and then continue back up from there.
I can see this as a handy tool for swing traders and maybe even daytraders who are afraid of getting stopped out on such moves (scam wicks, spikes, whale moves, fakeouts, false breakouts, and all the other names they go by).
Conclusion
What is the conclusion on the BSI Indicator, then? As mentioned above, it is challenging to give a fair judgment to an indicator. It all comes down to how you use it. With that being said, some indicators are more reliable than others, but I think it’s fair to say it looks like BSI may be one of the better ones. It’s simple, easy to interpret, and highlights levels of importance for both short-term and long-term trades. I personally think it can be of great help for spotting solid entry and exit points.
Is it worth the price? Is the BSI indicator cheap or expensive? That is not an easy thing to answer, and it depends on several different things. How large is your account balance? How much do you plan to enter with on each trade? How many trades? Did you trade solely based on the indicator or other factors as well? I could go on and on. There are lots of free indicators on tradingview, so in that perspective, BSI is very expensive. Do the free indicators on tradingview provide the same amount of information and accuracy as BSI? Maybe not, and so the price may be very fair. With a decent-sized account balance, it won’t take many profitable trades to make up for the cost of the BSI indicator. But it won’t take many losing trades to double the price as well.
Do I recommend the BSI indicator, and should you get it?I think one key element to keep in mind here is your trading style. Some people love using indicators, while others prefer to trade solely based on price action. I haven’t used the indicator enough to give an honest recommendation, and even when I have used it for a long time, I probably won’t do it anyway. What works for me may not work for you.
The good news is that you don’t have to wait for my recommendation or anyone else. You can take the BSI indicator for a seven-day trial. Then you can play around with it all you want. If you like it, keep it. If you don’t, you can get your money back. Support from the Ivan on Tech team is top-notch, so I have complete trust in them honoring this deal.
If you have any experience with the BSI indicator, I would love to hear your thoughts on it. You can leave a comment below.
Get the BSI indicator here.