The STH Ratio, or Short-Term Holder Spent Output Profit Ratio, is an on-chain metric that assesses the profitability of transactions made by short-term holders of a digital asset. It calculates the ratio of the realized value of spent outputs to the value at which they were acquired. A ratio above one indicates that short-term holders are selling at a profit, while a ratio below one suggests they are selling at a loss. This metric provides insight into the capitulation or profit-taking behavior of recent market entrants.
Context
The current discussion around the STH Ratio frequently involves interpreting its movements in relation to market tops and bottoms, providing signals for potential price reversals. A key debate exists concerning the precise thresholds and historical precedents that define significant shifts in short-term holder behavior. Future developments will focus on integrating this metric with other on-chain indicators to build more comprehensive market cycle analysis models.
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