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Money Flow Index (MFI) measures price‑volume flow on a 0‑100 scale; learn how it’s computed, what 80/20 extremes mean, and how traders spot divergence in
The Money Flow Index (MFI) rose to 85 on Tuesday, flagging an overbought signal for Bitcoin as volume surged, while analysts note that such extreme readings often precede short‑term pullbacks in crypto markets【1】.
| At a glance | |
|---|---|
| Indicator | Money Flow Index (MFI) |
| Scale | 0 – 100 |
| Overbought threshold | 80 |
| Oversold threshold | 20 |
| Calculation window | 14 periods |
The MFI blends price and volume by first computing a “typical price” for each period – the average of the high, low and close ( (High + Low + Close) ÷ 3 )【1】. This typical price is then multiplied by the period’s volume to produce “raw money flow.” Positive raw money flow is summed when the typical price rises from the prior period; negative raw money flow is summed when it falls【1】. After 14 periods, the ratio of total positive to total negative money flow yields the Money Flow Ratio, which is transformed into the MFI via the formula 100 − 100 ÷ (1 + Money Flow Ratio)【1】.
When the MFI climbs above 80, it signals that buying pressure may be overheating, a condition that historically precedes profit‑taking or a price correction【1】. Conversely, readings below 20 suggest oversold conditions and potential buying opportunities. The indicator gains extra relevance when it diverges from price: for example, a rising Bitcoin price paired with a falling MFI can warn that the rally lacks genuine volume support【1】.
Money flow can also be expressed more simply: it equals the average of high, low and close multiplied by daily volume, a calculation that highlights whether today’s flow is positive or negative relative to yesterday’s figure【2】. Positive money flow—when more shares are bought on upticks than downticks—implies upward price pressure, while negative flow hints at a likely decline【2】.
An MFI reading at the extreme ends of its 0‑100 range provides a concrete gauge of market sentiment, but its true value lies in spotting mismatches between price and underlying money flow—an early warning that can help crypto traders anticipate short‑term reversals.
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 2 outlets · Jun 29, 2026 · How we report
It is a mathematical ratio calculated by dividing the total existing supply of an asset (stock) by the amount of new supply produced annually (flow).
Halving events reduce the block reward for miners by 50%, which lowers the annual flow of new Bitcoin and increases the S2F ratio, theoretically signaling higher scarcity.
While it was influential in earlier cycles, its predictive accuracy has weakened as Bitcoin's price has frequently deviated from the model's projections, leading many to use it as a historical reference instead.
The model is applied because Bitcoin has a limited, code-defined supply schedule, making it comparable to scarce physical commodities like gold.