BTC Drop Reflexivity

Measure how a token behaves when Bitcoin drops—a risk signal for market drawdowns.

What is BTC Drop Reflexivity?

BTC Drop Reflexivity measures how much a token typically falls (or rises) relative to Bitcoin during significant BTC price drops. It answers the question: "When Bitcoin drops 5%, does this token drop 5%, 15%, or does it actually hold steady?"

This metric helps you:

• Assess downside risk: Understand how exposed a token is to broad market selloffs

• Compare relative stability: Find tokens that show strength during BTC drawdowns

• Inform position sizing: Higher reflexivity = higher risk during market corrections

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Use Cases

1. Portfolio risk management: Screen out high-reflexivity tokens when reducing risk exposure

2. Flight to quality: During uncertain markets, identify tokens with lower reflexivity scores

3. Position sizing: Allocate smaller positions to high-reflexivity assets

4. Relative value: Compare reflexivity across similar tokens (e.g., competing L1s or DeFi protocols)

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How It Works

Calculation

1. We identify days when Bitcoin drops more than 3% within a 24-hour period

2. For each drop event, we calculate the reflexivity ratio:

   Reflexivity Ratio = Token % Change / BTC % Change

   Example: If BTC drops -5% and a token drops -15%, the ratio is -15% / -5% = 3.0

3. We compute a rolling median across the last 4-5 qualifying BTC drop events to smooth out noise

What the Ratio Means

Ratio	Interpretation
< 0	Token gains when BTC drops (very rare, inverse correlation)
0 to 1	Token drops less than BTC (more stable)
= 1	Token drops the same as BTC
> 1	Token drops more than BTC (amplified volatility)

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API Response Fields

The btc_drop_reflexivity object is included in the Token Information endpoint response:

Field	Type	Description
signal	number	Primary metric. Rolling 5-drop median reflexivity ratio. Lower is better.
avg_signal	number	TBD
volatility	number	TBD
signal_percentile	number	TBD
score	string	Risk classification: "low", "medium", or "high"
drops_in_window	integer	Number of BTC drop events used in the calculation (4-5 required)
is_stablecoin	boolean	Whether the token is classified as a stablecoin

Note: Returns null if there are fewer than 4 qualifying BTC drop events in the last 365 days.

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Interpreting the Results

Example Response

{
  "btc_drop_reflexivity": {
    "drops_in_window": 5,
    "signal": 1.42,
    "avg_signal": 1.58,
    "volatility": 0.31,
    "signal_percentile": 62.5,
    "score": "medium",
    "is_stablecoin": false
  }
}

Interpretation: This token typically drops ~1.4x more than Bitcoin during drawdowns (e.g., if BTC drops 5%, expect this token to drop ~7%). The medium score indicates moderate risk. The volatility of 0.31 suggests reasonably consistent behavior. At the 62.5th percentile, it's slightly more volatile than the median token in its market cap tier.

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Key Considerations

• New tokens: Reflexivity data requires sufficient BTC drop events. Tokens deployed recently may return null.

• Stablecoins: Will show values near 0 and are flagged via is_stablecoin: true.

• Upside correlation: Tokens with high downside reflexivity often also amplify gains during upswings. High reflexivity doesn't mean "bad", it means higher risk and potentially higher reward.

• Slow-changing signal: This is a general risk characteristic, not a real-time alert. It updates only when new BTC drop events occur.

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