Definition. The Bitcoin Price Temperature (BPT) is an oscillator that models the number of standard deviations that price has moved away from the 4-year moving average, seeking to establish a mean-reversion model based on the cyclical nature of Bitcoin halving and investment cycles. The BPT bands then establish price levels that coincide with specific standard deviation multiples to identify fair and extreme valuations.

Technical. All components use a 4-year (1,460-day) rolling window:

• BPT = (Price - sma(Price, 1460)) / std(Price, 1460) (purple oscillator)
• BPT0 Band = sma(Price, 1460) (blue), BPT2 = +2σ (green), BPT6 = +6σ (orange), BPT8 = +8σ (red) projected onto the price axis

Interpretation. The BPT expresses how statistically stretched price is relative to its own 4-year history — a window chosen to span one full halving cycle. Low temperatures near or below the BPT0 band have historically coincided with bear-market accumulation phases, while excursions toward the BPT6 and BPT8 bands have marked euphoric cycle peaks. Because the bands widen and tighten with realized volatility, the model adapts across cycles rather than relying on fixed price multiples; nevertheless, as with all mean-reversion frameworks, structural changes in Bitcoin's volatility profile shift what a given temperature implies.

Notes. Coined by DilutionProof. References: Introducing the Bitcoin Price Z-Score, 29-Nov-2020 and Bitcoin Price Temperature (Bands), 16-Dec-2020. Built from Price. Related price models: Mayer Multiple, Technical Pricing Models.