Indicator Overview

The indicator calculates the percentage of the total supply held by Short-Term Holders (STHs) that is currently holding an unrealised profit. The metric is expressed as a proportion (0 to 1), with 1 representing 100%. The calculation incorporates a 7-day smoothing to moderate volatility and highlight the overall trend. High percentages suggest peak STH confidence and potential market tops, while low percentages suggest maximum capitulation and potential market bottoms.

How To Use

When the indicator registers historically high percentages (approaching 1), it implies STH euphoria is high, signalling potential profit-taking and a looming market top or major correction. Conversely, extremely low readings suggest STHs have absorbed significant losses and are nearing capitulation, often preceding major cyclical bottoms and offering prime opportunities for patient accumulation. Monitor for sharp increases from low levels, which can confirm the start of a new uptrend as STHs rapidly become profitable.