Local Stress Index (LSI) is an hourly composite index of local Bitcoin market stress on a scale from 0 to 100. It answers one question: is the market currently experiencing acute short-term stress, or is it in a calm regime?
It is not a cycle forecasting metric or a measure of fair value. It is a detector of the market’s current state. The index is built from three subindices - price, flow, and leverage. The features within each block are normalized against the previous 90 days rather than Bitcoin’s entire history.
The main idea of this issue is that the stress level provides only half the information. Across the 2,160-hour sample from May 7 to August 5, 2026, the index remained in the calm zone 95.0% of the time, with a median value of 2.04. By design, LSI stays close to zero most of the time. Its value is not in those 95%, but in the rare 5% and in what the stress consists of. Two hours with the same LSI can have completely different driver structures. The index shows intensity, while the drivers show the mechanism producing it.
In previous issues, we examined decision architecture in Decision Architecture for Bitcoin. The same two-layer logic is used here: a composite index and its decomposition into drivers.
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