The miner sentiment index: a new metric predicting Bitcoin price movements

A few months ago, I developed the Miner Sentiment Index ????. This index is based on several key metrics:

Miner Sentiment

Hashrate: A normalized average network hash rate. An increase in hashrate suggests that more miners are actively mining coins, making the network more secure.

Difficulty: A normalized average value of difficulty, which adjusts based on the overall network hash rate. A rising difficulty points to the competitiveness of miners and the network's stability.

Block Count: The normalized count of blocks produced in the network. A higher block count can indicate network activity and the health of the mining ecosystem.

Total Block Reward: The normalized value of the total block reward in US dollars. An increased reward might indicate the rising value of mining the coin and mining efficiency.

In essence, this tool analyzes the normalized metrics mentioned above, computes a weighted sum of this data, and creates the Miner Sentiment Index ????, juxtaposing it against the Bitcoin price. Should the metric value rise, it denotes that Bitcoin's primary indicators are strengthening or thriving. Consequently, a spike in the MS implies the growth and fortification of the Bitcoin network.

Yesterday, I examined the 30-day fluctuations of this index ???? (blue line) and observed a peculiar trend. Whenever this metric decreases, the market adjusts, leading to a decline in the BTC price.

The MS index ???? has a weight formula: 25 * hashrate_norm + 25 * difficulty_norm + 10 * block_count_norm + 40 * total_reward_block_norm AS MS. The block rewards miners receive bear the most weight. Clearly, when miners process fewer transactions, the index is set to drop. However, I'm still perplexed that this 30-day index shift so blatantly correlates with BTC's price, signifying a correction whenever the metric drops.

I'd be eager to hear any explanations here or on Twitter under this post: https://x.com/axeladlerjr/status/1698690164086714562.