Analyzing Bitcoin’s Most Important Cohort
Hey everyone, and welcome back to the On-Chain Mind Newsletter.
Day-to-day, Bitcoin’s price swings might feel random, but they’re actually choreographed by the most impulsive traders in the market — the Short-Term Holders. These are the most reactive, emotional participants in the market, whose moves create predictable patterns and powerful counter-trend signals that can reveal when to buy, hold, or prepare for corrections. Ignoring their behaviour means leaving opportunities on the table — or worse, becoming one yourself.
If you can decode their emotional behaviour, you’ll gain a massive edge most investors miss entirely — and know much pretty much exactly when to act.
Let’s get into it.
Insights at a Glance:
Short-Term Holders Drive the Market: Investors holding Bitcoin for less than 155 days are the most emotional and reactive, making their behaviour a critical signal for market trends.
STH Realized Price as the Backbone: The average price short-term holders paid for their coins acts as a bullish or bearish threshold, guiding buying and selling opportunities.
Cost Bands and Sentiment Metrics: Tools like the Cost Bands and Net Unrealized Profit and Loss (NUPL) reveal market sentiment in a quantifiable way.
MVRV Momentum for Timing: This oscillator measures short-term holder profitability momentum, offering early clues about potential market reversals.
The Emotional Heartbeat of BTC
Bitcoin’s market is unlike traditional assets. While all markets are influenced by human psychology, Bitcoin offers a unique opportunity: the ability to look under the hood at different cohort types and decode their behaviour. For those willing to dig in, this transparency provides powerful signals others simply don’t have access to.
At the centre of the day-to-day Bitcoin market dynamic is the Short-Term Holder (STH) investor. These are participants who’ve held Bitcoin for 155 days or less, or roughly 5 months. This threshold isn’t arbitrary; data consistently shows that once holders cross this mark, their behaviour shifts dramatically, moving from reactive to more resolute.
But before we dive in, here’s an important reality: we’re all short-term holders at some point. Every time you buy a fresh slice of BTC, you’re classified as a STH initially. What really matters is what you do after that purchase — whether you hold longer or sell quickly determines which camp you eventually fall into. The most fascinating insights come from studying those who stay in the short-term holder cohort and how their behaviour shapes the market.
Why are short-term holders so pivotal?
They’re the most emotional cohort in the market, prone to panic-selling during dips and chasing euphoria during rallies. This reactivity makes them a powerful counter-trend signal. While rational investors aim to stay calm, short-term holders often do the opposite, amplifying price swings and creating opportunities for those who can anticipate their moves.
STH Realized Price
The fundamental metric behind tracking short-term holders is the short-term holder realized price, the average price at which these investors acquired their Bitcoin. Currently, this sits at approximately $105,000, calculated using a dynamic UTXO-weighted model that prioritises recently moved coins.
The implications are pretty straightforward:
Price > STH Realized Price: When Bitcoin’s price exceeds this level, it signals a bullish market. Short-term holders are in profit, fostering optimism and encouraging holding or buying.
Price < STH Realized Price: A dip below this threshold doesn’t spell the end of a bull market but often marks a buying opportunity. Historically, purchasing Bitcoin below the realized price during bull cycles has been a winning strategy across multiple cycles.
However, in bear markets, the dynamic flips. The realized price becomes a stubborn resistance level, as short-term holders, disappointed by unmet rally expectations, sell to break-even, creating further selling pressure. This dual nature makes the realized price a versatile tool for assessing market health in both regimes.
STH Cost Bands
To dive deeper, we can use short-term holder cost bands, a visual tool that maps how far Bitcoin’s price deviates from the realized price. These bands, colour-coded for clarity, provide a snapshot of market sentiment:
White Line (Realized Price): The baseline, currently around $105,000.
Yellow Band ($105,000–$131,000): The most common trading range in this bull cycle, indicating optimism without excess.
Orange Band ($131,000–$157,000): A zone of heightened enthusiasm, often a precursor to local corrections.
Red Band ($157,000–$190,000): Euphoria territory, where corrections are almost inevitable.
Green Band ($84,000-$105,000): A zone of fear, marking the best buying opportunities in a bull.
This cycle, Bitcoin has mostly stayed in the yellow band, reflecting steady optimism. Brief ventures into the orange band have preceded pullbacks, while dips into the green band offered the most prime buying opportunities. The red band, last seen during the initial $70k rally, was followed by a significant correction lasting months. These bands help us gauge whether the market is overstretched or undervalued relative to the STH cohort, and by how much.
Net Unrealized Profit and Loss (NUPL)
Another powerful tool is the STH-specific version of the popular Net Unrealized Profit and Loss (NUPL) metric, which measures the unrealized gains or losses held by short-term holders. Unlike raw numbers, NUPL uses colour-coded phases to reflect market sentiment:
Green (Optimism): The current phase, where short-term holders are in profit but not euphoric.
Blue (Fear): A zone of losses, often a buying signal during bull markets.
Orange (Belief): High profits, indicating potential pullbacks.
Red (Euphoria): Extreme gains, often followed by sharp corrections.
Purple (Capitulation): Mass washouts, that have marked macro-level bottoms.
This cycle, Bitcoin has spent most of its time in the green optimism phase, with two brief forays into the orange belief phase, each followed by a retreat. The absence of red euphoria or purple capitulation signals a measured cycle compared to the dramatic swings of the 2017 or 2021 cycles. However, this stability doesn’t preclude future volatility—Bitcoin is notorious for rapid unexpected moves.
The STH-NUPL’s strength lies in its ability to quantify emotional extremes. When short-term holders are deep in the blue fear zone, their panic creates oversold conditions, ideal for contrarian buying. Conversely, the orange and red zones signal overbought conditions, where profit-taking becomes likely. I like the NUPL because of its simplicity. If I can’t bring myself to go deep into the charts to find out what’s going on, this gives me the easy visual cue I need to know exactly what this group are up to.
MVRV Momentum
The MVRV Momentum indicator offers a dynamic view of short-term holder behaviour by comparing their average cost basis to a longer-term average. This oscillator reveals whether holders are in extreme profit or loss and how quickly these conditions are changing.
+30% (Overheated): Signals a potential local top, as many holders may sell to lock in gains.
-30% (Oversold): Indicates a buying opportunity, as panic-selling exhausts itself.
Current Level (~5%): Suggests mild optimism, with no immediate reversal signals.
Bitcoin’s current MVRV Momentum of 5% indicates a healthy market, accepting these elevated price levels without overheating. Interestingly this cycle, reversals have occurred at around +30% or -30%. These levels reflect stretched positions that prompt mass buying or selling. This cycle’s restraint, with momentum rarely exceeding 10% for long, just shows its measured nature.
The MVRV Momentum’s power lies in its ability to capture the speed of sentiment and profitability changes, which gives us a great early warning signal of a potential reversal.
The Current Cycle
Bitcoin’s market currently reflects a healthy, measured balance. Trading just a few thousand below its all-time high and comfortably above the $105k STH realized price, it sits within the yellow cost band and the green NUPL “optimism” phase, with an MVRV Momentum reading of around 5%. This combination points to a bull market with room to grow, though the persistent low-volatility environment remains a lurking risk — capable of snapping without much warning.
A decisive push into the orange cost bands ($131,000–$157,000) could indicate the first signs of local overheating, especially if the cycle continues to unfold in its steady, step-ladder fashion. Conversely, a drop back toward — or even briefly below — the $105k STH realised price would, historically speaking, present one of the most attractive buying opportunities of the cycle, provided you believe the broader bull market structure remains intact.
Thinking Like a Contrarian
Bitcoin’s market is shaped by an interplay of psychology and economics, and it rewards those who act against the crowd. Short-term holders, driven by emotion, create opportunities for those rational investors amongst us. Their panic during dips and euphoria during rallies create predictable patterns, rooted in human nature.
You can exploit these patterns, by buying when fear dominates and selling when greed takes over. But that’s much easier to say on paper than in practice. Remember, we’re all short-term holders at heart. But by staying data-driven and keeping a clear head, you can recognise genuine signals amid the chaos and claim your title as the calmest hand in the storm.
Key Takeaways
Short-Term Holders Drive Volatility: Their emotional reactions create counter-trend signals, ideal for strategic buying or selling.
STH Realized Price Guides Market Health: Above this level signals bullishness; below it, buying opportunities emerge in bull markets or resistance in bear markets.
Sentiment Metrics Enhance Precision: Cost Bands and NUPL highlight emotional extremes, guiding entry and exit points.
MVRV Momentum Signals Reversals: Extreme readings (+30% or -30%) warn of local tops or bottoms, aiding your timing decisions.
If you want to unlock the full picture — including access to my Custom Indicator Suite — consider upgrading to Premium 🚀
I’ll catch you in the next one.
Cheers,
OCM
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Great article as always. Some great insights that can help corroborate other stuff. OCM - do you integrate any of these short term holder metrics into your omega metric? Not asking for which or their weighting but just confirmation that some of these are integrated into this metric?
BTC will pull a move no one expects