BTC - FRIC: Friction & Realized Intensity Composite

Title: BTC - FRIC: Friction & Realized Intensity Composite
Data: IntoTheBlock

Overview & Philosophy
FRIC (Friction & Realized Intensity Composite) is a specialized on-chain oscillator designed to visualize the "psychological battlegrounds" of the Bitcoin network.

Most indicators focus on Price or Momentum. FRIC focuses on Cost Basis. It operates on the thesis that the market experiences maximum "Friction" when the price revisits the cost basis of a large number of holders. These are the zones where investors are emotionally triggered to react—either to exit "at breakeven" after a loss (creating resistance) or to defend their entry (creating support).

This indicator answers two questions simultaneously:

• Intensity: Is the market hitting a Wall (High Friction) or a Vacuum (Low Friction)?
  
• Valuation: Is this happening at a market bottom or a top?
  

The "Alpha" (Wall vs. Vacuum)
Why we visualize both extremes: This indicator filters out the "Noise" (the middle range) to show you only the statistically significant anomalies.

• 1. The "Wall" (Positive Z-Score Bars)
  

What it is: A statistically high number of addresses are at breakeven.
The Implication: Expect a grind. Price action often slows down or reverses here because "Bag Holders" are selling into strength to get out flat, or new buyers are establishing a floor.

• 2. The "Vacuum" (Negative Z-Score Bars)
  

What it is: A statistically low number of addresses are at breakeven.
The Implication: Expect acceleration. The price is moving through a zone where very few people have a cost basis. With no natural "breakeven supply" to block the path, price often enters Price Discovery or Free Fall.

Methodology
The indicator constructs a composite view using two premium metrics from IntoTheBlock:

• 1. The "Activity" (Friction Z-Score): We utilize the Breakeven Addresses Percentage. This measures the % of all addresses where the current price equals the average cost basis.
  

- Normalization: We apply a rolling Z-Score (Standard Deviation) to this data.
- The Filter: We hide the "Noise" (e.g., Z-Scores between -2.0 and +2.0) to isolate only the events where market structure is truly stretched.

• 2. The "Context" (Valuation Heatmap): We utilize the MVRV Ratio to color-code the friction.
  

• Deep Value (< 1.0): Price is below the average "Fair Value" of the network.
  
• Overheated (> 3.0): Price is significantly extended above the "Fair Value."
  

Credit: The MVRV Ratio was originally conceptualized by Murad Mahmudov and David Puell. It remains one of the gold standards for detecting Bitcoin's fair value deviations.

How to Read the Indicator
The chart is visualized as a Noise-Filtered Heatmap.

• 1. The Bars (Intensity)
  

• Bars Above Zero: High Friction (Congestion). The market is fighting through a supply wall.
  
• Bars Below Zero: Low Friction (Vacuum). The market is accelerating through thin air.
  
• Gray/Ghosted: Noise. Routine market activity; no significant signal.
  

• 2. The Colors (Valuation Context) The color tells you why the friction is happening:
  

🟦 Deep Blue (The "Capitulation Buy"):
Signal: High Friction + Low MVRV.
Meaning: Investors are panic-selling at breakeven/loss, but the asset is fundamentally undervalued. Historically, these are high-conviction cycle bottoms.

🟥 Dark Red (The "FOMO Sell"):
Signal: High Friction + High MVRV.
Meaning: Investors are churning at high valuations. Smart money is often distributing to late retail arrivers. Historically marks cycle tops.

🟨 Yellow/Orange (The "Trend Battle"):
Signal: High Friction + Neutral MVRV.
Meaning: The market is contesting a level within a trend (e.g., a mid-cycle correction).

Visual Guide & Features
10-Zone Heatmap: A granular color gradient that shifts from Dark Blue (Deep Value) → Sky Blue → Grey (Neutral) → Orange → Dark Red (Top).

Noise Filter
A unique feature that "ghosts out" insignificant data, leaving only the statistically relevant signals visible.

Data Check Monitor
A diagnostic table in the bottom-right corner that confirms the live connection to IntoTheBlock data streams and displays the current regime in real-time.

Settings
Lookback Period (Default: 90): The rolling window used for the Z-Score calculation. Shortening this (e.g., to 30) makes the indicator more sensitive to local volatility; lengthening it (e.g., to 365) aligns it with macro cycles.

Noise Threshold (Default: 2.0): The strictness of the filter. Only friction events exceeding this Z-Score will be highlighted in full color.

Show Status Table: Toggles the on-screen dashboard.

Disclaimer
This script is for research and educational purposes only. It relies on third-party on-chain data which may be subject to latency or revision. Past performance of on-chain metrics does not guarantee future price action.

Tags
bitcoin, btc, on-chain, mvrv, intotheblock, friction, z-score, fundamental, valuation, cycle