This article is the second in the series of articles by On-Chain Data Academy, with a total of 10 articles. It guides you step by step in understanding on-chain data analysis. Interested readers are welcome to follow this series.
(Previous Summary: On-Chain Data Academy (I): Do you know what the average cost of BTC in the entire market is?)
(Background Supplement: “Introduction to On-Chain Analysis” covers all the basic key indicators of the crypto market, including concepts and tools.)
TLDR
This article continues the concept of MVRV and introduces LTH-MVRV. LTH = Long Term Holders, defined as BTC held for more than 155 days. LTH-MVRV represents the profit status of long-term holders. LTH-RP represents the average cost of long-term holders.
What is LTH?
LTH = Long Term Holders, defined by Glassnode as “BTC held for more than 155 days.” As for why it is 155 days, Glassnode provides a detailed explanation on its official website. Due to the complexity of the content, it will not be elaborated here, but interested readers can read it themselves.
Introduction to LTH-RP
LTH-RP is the Realized Price of long-term holders, which is their average holding cost. The calculation is LTH-Realized Cap divided by circulation. As shown in the figure below, the light green curve represents the Realized Price of the entire market, while the dark green curve represents the Realized Price of LTH. It is evident that:
The holding cost of long-term holders is usually lower than the average cost of the entire market.
(Comparison of Realized Price and LTH-RP)
Introduction to LTH-MVRV
LTH-MVRV represents the profit situation of long-term holders, and the calculation method is similar to that of MVRV, calculated as “current market value / LTH-Realized Cap,” which can also be written as “current market price / LTH-RP.” As shown in the figure below: The changes in LTH-MVRV are usually more pronounced than those in MVRV, as the profits of LTH are generally more substantial (meaning they tend to earn more!).
(Comparison of MVRV and LTH-MVRV; the orange line is LTH-MVRV, and the yellow line is MVRV)
Application of LTH-MVRV for Bottom Fishing
When LTH-MVRV < 1 (or when the market price is below LTH-RP), it indicates that even the average long-term holders are at a loss. Typically, this situation represents a good bottom fishing opportunity . As shown in the figure below, I have marked the instances when LTH-MVRV < 1, which corresponds almost entirely to periodic major bottoms. Therefore, when designing bottom-fishing strategies, consider including this indicator!
(Prices corresponding to LTH-MVRV < 1)
Conclusion
The above is the complete content of On-Chain Data Academy (II). Interested readers who want to delve deeper into on-chain data analysis are sure to follow this series! If you want to see more analyses and teaching content about on-chain data, feel free to follow my Twitter (X) account! I hope this article has been helpful to you. Thank you for reading.