Indicator Overview

The indicator calculates the current amount of a specific cryptocurrency's circulating supply held by Short-Term Holders (STHs) that is currently sitting in profit. The calculation uses a 7-day smoothing mechanism for the raw data to provide a clearer trend. Increasing values suggest a larger portion of STHs are profitable, potentially indicating periods of market exuberance or risk. Conversely, low values reveal STHs are largely at a loss, often correlating with capitulation and potential bottoms.

How To Use

High readings on the indicator (many STHs in profit) often signal an increased risk of a local top or correction as profitable short-term investors may choose to realise their gains. Conversely, historically low readings where STHs are at a loss can present potential accumulation opportunities, suggesting selling pressure is exhausted. Traders should monitor the rate of change of the metric, as a steep incline/decline can foreshadow a sharp market move, providing a timely entry or exit signal.