Bitcoin Expectile Model

The Bitcoin Expectile Model is an advanced trading indicator designed to forecast long-term price trends in Bitcoin by leveraging Expectile Regression. Inspired by the popular Bitcoin Quantile Model by PlanC, this tool uses multiple expectile fits to reveal historical accumulation zones (support) and distribution zones (resistance) across the entire Bitcoin price history. It is a powerful addition to any trader’s toolkit for identifying market tops, bottoms, and long-term investment opportunities.

While optimized for the Bitcoin All Time History Index (INDEX:BTCUSD) on a 3-day or weekly timeframe using a logarithmic scale, this model can also be applied to other assets—especially those with a long-term upward bias—on the daily timeframe or higher.

This TradingView version is specifically built for the Bitcoin 1W chart, but adventurous traders can experiment with it on other assets and timeframes.

How to Trade with the Bitcoin Expectile Model

The model works by fitting 7 individual Expectile Log-Log Regressions to the price data, each with a different tau value (multiplied by 100 for ease of use).

• Lower tau values track historical price lows and accumulation zones.
• Higher tau values track price highs, helping anticipate potential correction zones.

Color-coded zones give traders a quick visual reference:

• Green zone – Long-term buy/accumulation area.
• Purple zone – Rare overshoot bottoms (high-value anomalies).
• Red zone – Distribution/selling area.

The fits can be extrapolated into the future, providing potential forward-looking price paths. Traders can set the "Forecast End" date to visualize where price projections may lead.

While designed for Bitcoin with a log scale, the model can also work for assets like QQQ (shown in the example) using a linear scale. Adjusting the Start Date allows you to focus on a specific segment of price history, making it suitable for shorter-term support/resistance mapping.

Understanding Expectile vs Quantile Regression

Expectile and Quantile regressions both aim to identify price extremes where reversals are more likely. The main differences are:

• Quantile Regression – Minimizes weighted absolute error (Pinball loss).
• Expectile Regression – Minimizes weighted squared error (Expectile loss), which makes it computationally simpler using Iteratively Reweighted Least Squares.

Quantiles are easier to interpret statistically, while expectiles provide more flexibility and computational efficiency for fitting multiple levels.

Model Adjustments & Historical Alignment

Many Bitcoin models ignore the earliest price ranges. This model defaults to starting at 2010-07-16 for alignment with existing frameworks.
For historical accuracy, traders can enable "Correct for Genesis Block" to offset the X-axis and account for missing bars before recorded price history.

Settings Overview

• Start Date – Define the starting point for the regression fit.
• Correct for Genesis Block – Adjusts for pre-history missing bars.
• Expectiles – Enable or disable specific expectile fits; set tau values to control fit proximity to highs or lows.
• Forecast End – Choose the date for extrapolated projections to stop.
• Iterations Number – Controls precision vs speed in fitting; more iterations = higher accuracy but longer computation time.

FAQ

Q: What is the main advantage of the Bitcoin Expectile Model over other regression-based tools?
A: It provides a smoother and more computationally efficient way to detect accumulation and distribution zones over Bitcoin’s history, making it ideal for long-term investing and market cycle timing.

Q: Can this model be used for short-term trading?
A: While designed for long-term analysis, adjusting the start date and timeframe can make it effective for identifying shorter-term zones of support and resistance.

Q: Does it work on assets other than Bitcoin?
A: Yes. It can be applied to trending assets like stocks, indices, or commodities, particularly those with a long historical price record.

Q: How can I access the Bitcoin Expectile Model?
A: You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.