Crypto Composite Risk Model

Updated: February 10, 2026

Risk Scale: 0.0 (Safe) to 1.0 (Risky)

0.0 - 0.3: Accumulation Zone 0.3 - 0.7: Neutral/Hold 0.7 - 1.0: Distribution Zone

Methodology & Weights

The Composite Risk Score (0.0 to 1.0) is a weighted average of 7 distinct factors.
A score of 1.0 indicates the asset is historically overextended, volatile, and at peak valuation (High Risk).
A score of 0.0 indicates the asset is undervalued, stable, and in deep drawdown (Low Risk).

Category Metric Weight Description
Trend & Valuation
(59%)		 Log-Regression Deviation 23.5% Measures how far price is deviated from its long-term logarithmic growth curve.
TWAP Deviation 17.6% Measures price extension relative to its lifetime Time-Weighted Average Price.
SMA Deviation (140D) 17.6% Measures momentum extension relative to the 20-week Moving Average.
Market Cycle
(24%)		 Drawdown from ATH 23.5% Near All-Time Highs = Max Risk. Deep Drawdown (-80%) = Min Risk.
Stability
(17%)		 Volatility 5.9% Standard deviation of returns. High volatility increases risk score.
Beta 5.9% Correlation to S&P 500. High correlation implies higher systemic risk.
Sharpe Ratio 5.9% Risk-adjusted returns. High Sharpe reduces risk score (inverted).