This tools is designed to spot when Long-term Holders are spending a significant proportion of their holdings in a sustained manner. This has historically occurred in bull markets (taking profits), and during capitulation events (panic selling).

The indicator is constructed using the following framework:

• If LTH supply declines relative to the previous day, the underlying calculation will return a value of one, and returns 0 otherwise.

• A 7-day moving average is then applied such that if LTH supply declines every day for 7-days, the indicator will reach a maximum value of one.

• Thus, if LTH supply declines for 3 out of 7 days, it will return a value of 0.428 suggesting moderate spending.

• A value of zero means LTH Supply has not declined in the last 7-days, suggestion little spending is taking place.

Traces are provided for the total LTH Supply 🟠, and the LTH cost basis 🔵 for comparison.

Further References

This metric was first introduced in The Week On-chain (WoC 23-2023)