This chart shows the historical backtest of the on-chain risk. The legend allows you to toggle between the individual risk charts that make up the total on-chain risk. Above the chart you can set the weights of the individual risk metrics and see how it changes the total on-chain risk. A weight of 0 removes the metric from the total on-chain risk calculation and a weight of 0.5 makes it contribute 50% less. After the total on-chain risk is calculated, the metric is re-normalized between 0 and 1. To display the true average you can toggle to the “Average” option above the chart.
The historical on-chain risk metric serves as a complementary risk indicator to the original risk metric by using some of the most important on-chain metrics that we offer on our charts page. In this way you can easily check the sentiment across many important on-chain metrics, and use the charts page to dive deeper into the individual metrics. Some individual risk charts provide a unique look to the current stage of the market as well. For example the terminal price risk metric has so far always reached 0 at market cycle bottoms and above 0.9 for market cycle peaks (assuming the most recent significant peak was in April 2021).
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