Definition ∞ 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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