Definition. Supply Delta is a metric that attempts to provide a more responsive and distinct signal for catching Bitcoin market cycle tops. It measures the momentum of Short-Term Holder supply relative to Long-Term Holder supply, each normalized against its own long-run trend. The chart shows Long-Term Holder Supply (blue), Short-Term Holder Supply (orange), the Supply Delta oscillator (red) and price (grey).

Technical. Each supply series is divided by its own 720-day (~2-year) simple moving average before the spread is taken:

• Supply Delta = STH / sma(STH, 720) - LTH / sma(LTH, 720)

where STH and LTH are Short-Term Holder Supply and Long-Term Holder Supply, respectively.

Interpretation. The underlying theory is that in late-stage bull markets, Long-Term Holders are generally reaching peak distribution as expensive coins are transferred from experienced investors to new euphoric buyers. Rising Supply Delta therefore describes coin age structure tilting toward new hands — STH supply expanding above its trend while LTH supply falls below its own. As the balance tips such that the market is saturated with newer hands, the Supply Delta metric will invert from the uptrend and start to decline, often before the raw supply metrics reverse in their respective trends, which is what gives the oscillator its early-warning character around cycle peaks. Readings near zero describe a market where both cohorts sit close to their long-run trend.

Notes. Coined by Capriole Investments (2021) — see Introducing Supply Delta: A Simple Metric to Identify Bitcoin Tops. Built from Long-Term Holder Supply and Short-Term Holder Supply. See also the LTH to STH Supply Ratio.