This article is the second in the On-Chain Data Academy series, which consists of 10 articles. It will guide 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: “Beginner’s Course on On-Chain Analysis” for a complete grasp of key indicators in the crypto market; concepts and tools are all included.)
TLDR
This article will continue the concept of MVRV from the previous article and introduce 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.” The reason for 155 days is explained in detail on Glassnode’s official website. Due to the complexity of the content, it will not be discussed here; interested readers can refer to it themselves.
Introduction to LTH-RP
LTH-RP, which is the Realized Price of long-term holders, represents their average holding cost. The formula is LTH-Realized Cap divided by the circulating supply. As shown in the diagram below, the light green curve represents the Realized Price for the entire market, while the dark green curve represents the Realized Price for LTH. It is evident that:
The holding cost for long-term holders is usually lower than the average cost across the entire market.
(Comparison of Realized Price and LTH-RP)
Introduction to LTH-MVRV
LTH-MVRV represents the profit status of long-term holders and is calculated similarly to MVRV, using the formula “Current Market Value / LTH-Realized Cap,” which can also be expressed as “Current Market Price / LTH-RP.” As depicted in the diagram below, changes in LTH-MVRV are typically more pronounced than those in MVRV, as long-term holders usually experience more substantial profits (meaning they are more likely to make gains!).
(Comparison of MVRV and LTH-MVRV; the orange line represents LTH-MVRV, while the yellow line represents 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 long-term holders are on average at a loss. Typically, this situation presents a good opportunity for bottom fishing . As shown in the diagram below, I have marked instances when LTH-MVRV < 1, which correspond to almost all periodic major bottoms. Therefore, when designing bottom fishing strategies, consider incorporating this indicator!
(Prices corresponding to LTH-MVRV < 1)
Conclusion
This concludes the content of On-Chain Data Academy (II). Interested readers who wish to delve deeper into on-chain data analysis should be sure to follow this series! If you want to see more analyses and educational content on on-chain data, feel free to follow my Twitter (X) account! I hope this article has been helpful to you. Thank you for reading.