Bitcoin Direction Index

A real-time web application that calculates a Bitcoin Direction Index based on US liquidity metrics (Federal Reserve balance sheet, Treasury General Account, Reverse Repo), ISM Manufacturing PMI, and Bitcoin price momentum.

Features

• Real-time Bitcoin Price: Live BTC/USD price from Coinbase API
• US Liquidity Metrics:
  • Federal Reserve Balance Sheet (WALCL)
  • Treasury General Account (TGA)
  • Reverse Repo Facility (RRP)
  • Calculated US Liquidity (Fed - TGA - RRP)
• ISM Manufacturing PMI: Business cycle indicator
• Bitcoin Direction Index: Composite 0-100 index combining all factors
• Correlation Analysis: Tracks correlation between the index and Bitcoin price

Getting Started

Prerequisites

• Node.js 18+
• npm, yarn, pnpm, or bun

Installation

1. Clone the repository:

git clone <your-repo-url>
cd bitcoin-direction-index

2. Install dependencies:

npm install

3. Set up environment variables:

Create a .env.local file in the root directory:

# FRED API Key (Free - Get yours at https://fred.stlouisfed.org/docs/api/api_key.html)
# The demo key works but has rate limits. For production, get your own key.
FRED_API_KEY=demo

Note: To get your free FRED API key:

1. Visit https://fred.stlouisfed.org/docs/api/api_key.html
2. Sign up for a free account
3. Generate an API key
4. Add it to your .env.local file

Running the Development Server

npm run dev

Open http://localhost:3000 with your browser to see the dashboard.

How It Works

The Bitcoin Direction Index combines three key factors:

1. US Liquidity (40% weight): Calculated as Fed Balance Sheet - TGA - RRP, normalized using z-scores
2. ISM PMI (35% weight): Manufacturing PMI indicator, normalized around 50 (expansion/contraction threshold)
3. Bitcoin Trend (25% weight): Short-term vs medium-term price momentum

The index ranges from 0-100:

• 0-20: Very Bearish
• 20-40: Bearish
• 40-60: Neutral
• 60-80: Bullish
• 80-100: Very Bullish

Data Sources

• FRED API: Federal Reserve Economic Data for liquidity metrics
• Coinbase API: Real-time Bitcoin price data
• ISM PMI: Currently uses FRED's NAPM as a proxy (for accurate ISM PMI, manual entry or paid API required)

Project Structure

├── app/
│   ├── api/
│   │   ├── bitcoin/      # Bitcoin price API
│   │   ├── dashboard/     # Combined dashboard data
│   │   ├── fred/          # FRED data API
│   │   └── pmi/           # PMI data API
│   ├── layout.tsx
│   └── page.tsx
├── components/
│   ├── dashboard.tsx      # Main dashboard component
│   └── ui/                # shadcn/ui components
├── lib/
│   ├── index-calculation.ts  # Index calculation logic
│   ├── types.ts              # TypeScript types
│   └── utils.ts              # Utility functions
└── package.json

Technologies Used

• Next.js 16: React framework
• TypeScript: Type safety
• shadcn/ui: UI components
• Tailwind CSS: Styling
• Axios: HTTP client
• FRED API: Economic data
• Coinbase API: Cryptocurrency prices

Limitations & Future Improvements

• ISM PMI: Currently uses a proxy indicator. For production, integrate with a paid data provider or implement manual monthly updates
• Historical Correlation: Correlation calculation requires historical data storage (database) for accurate analysis
• Real-time Updates: Consider WebSocket connections for true real-time price updates
• Charts: Add historical charts using Recharts library (already installed)

License

MIT