As Bitcoin approaches its all-time high of $109k, market excitement is beginning to resurface. A key tool to track this shift in sentiment is the Short-Term Holder (STH) Supply in Profit/Loss Ratio, which helps gauge the mood of active investors.
This metric proved especially insightful during the correction on April 7, when it dropped to 0.03, signaling that nearly all STH-held supply was underwater. This low was recorded as BTC hit its $76k price floor. Since then, the ratio has surged above 9.0, meaning more than 90% of STH supply is now back in profit.
High Sentiment Could Signal Market Risk
While a ratio above 9.0 indicates strong profit for short-term holders, it can also signal heightened market risk. As more investors find themselves in profit, there is an increased chance of profit-taking, which could lead to a local top if new demand slows down.
As long as the STH Supply in Profit/Loss Ratio remains well above the equilibrium level of 1.0, the bullish momentum is likely to persist. However, any prolonged drop below this threshold could indicate a shift in market strength and suggest the potential for trend exhaustion.
Profit-Taking Surge, But Room for More
With short-term holders sitting on significant unrealized gains, the market may see increased profit-taking. Monitoring the behavior of this group is essential to identifying when demand exhaustion might approach, especially near a potential local top.
The recent surge in STH Realized Profit, now almost +3 standard deviations above its 90-day average, reflects a notable increase in profit realization. Historically, during previous rallies towards Bitcoin’s all-time high, this metric has reached over +5 standard deviations, signaling that much stronger profit-taking pressure is often necessary to counteract the inflow of fresh demand.
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over 8 years of experience covering the crypto, blockchain and fintech industries, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics.
Source: https://coindoo.com/bitcoin-approaches-109k-short-term-holder-sentiment-shifts/