Definition. The LTH Sell-Side Risk Ratio compares the total USD value realized by Long-Term Holders each day — the sum of all profits and losses they lock in on-chain — against the LTH realized capitalization. It is the Long-Term Holder scoped variant of the aggregate Sell-Side Risk Ratio.

Technical. The ratio uses entity-adjusted LTH realized profit and loss, normalized by an in-chart estimate of the LTH realized cap:

• LTH Realized Cap = (Price / LTH-MVRV) x LTH Supply
• LTH Sell-Side Risk Ratio = sma((LTH Realized Profit + LTH Realized Loss) / LTH Realized Cap, 15) (orange)
• Reference levels: Low Value Realization at 0.0005 (red) and High Value Realization at 0.0075 (blue)

Interpretation. This methodology quantifies the aggregate sell-side risk originating from the LTH cohort. It assumes that all profit and loss realized on-chain is a potential source of sell-side pressure, and division by realized cap provides normalization over time as it increases or decreases relative to changes in all-time capital inflows/outflows to the asset. The metric provides a comprehensive story about market cycles:

• ↗️ High values are associated with periods of high value realization, typically associated with heavy profit taking by coins with long holding periods. This is typical of late stage bull markets and can signal an oversupply of coins, or a view that prices are becoming expensive, and thus a relatively high risk environment.

• ↘️ Low values are associated with periods of low value realization by LTHs, and relatively low market volatility. This is typical of market consolidation phases, sideways market trends, and protracted bear markets. This tends to align with macro market lows as gradual accumulation takes place.

Notes. Coined by Mikołaj Zakrzowski (2022); see Introducing Bitcoin Sell-Side Risk. Built from Entity-Adjusted LTH Realized Profit, Entity-Adjusted LTH Realized Loss, LTH Supply and LTH-MVRV. See also the aggregate Sell-Side Risk Ratio and the Short-Term Holder Sell-side Risk Ratio.