Short-Term-Supply in Loss

Short-Term Supply in Loss Indicator

The Short-Term Supply in Loss is an on-chain metric that measures the proportion of coins held by short-term holders (typically <155 days) that are currently at a loss compared to their acquisition price. This indicator reveals the stress level among newer or more reactive participants, providing insights into potential sell pressure, capitulation risks, and short-term market sentiment.

Steps to Use the Short-Term Supply in Loss Metric

1. Understand the Concept:

• Short-Term Supply in Loss: The share of coins held by short-term holders where the current market price is lower than the purchase price.

• Relevance: Captures how many recent buyers are underwater, which strongly affects market psychology and behavior in the short term.

2. Interpret the Short-Term Supply in Loss Metric:

• High Share in Loss: Indicates that many recent buyers are underwater, which can lead to capitulation, panic selling, or reduced liquidity.

• Low Share in Loss: Suggests most short-term holders are in profit, typically aligning with bullish conditions and strong momentum.

• Rapid Increases: Often occur during sharp corrections, signaling stress among reactive market participants.

• Sharp Decreases: Seen during rallies, as short-term holders’ positions quickly move back into profit.

3. Analyze Historical Patterns:

• Bear Market Phases: Extended periods of high short-term supply in loss reflect weak hands holding underwater positions, often preceding capitulation.

• Local Bottoms: Spikes in short-term supply in loss often align with capitulation events, where weak holders exit and stronger hands accumulate.

• Bull Market Recoveries: Declines in this metric mark the transition back to profitability for new entrants, reinforcing bullish momentum.

4. Make Decisions:

• At Market Bottoms: Extremely high short-term supply in loss can highlight capitulation zones and potential accumulation opportunities.

• During Uptrends: Falling levels of this metric confirm recovery and reduced sell pressure from short-term participants.

• In Corrections: Rising short-term losses may precede short-term volatility, offering caution signals for traders.

Tips:

• Pair with Short-Term Supply in Profit: Together, they provide a complete view of short-term holder positioning.

• Compare with Long-Term Metrics: Contrast with long-term holders to see who holds stronger conviction during stress events.

• Identify Capitulation Signals: Large spikes often mark emotional selling and potential bottoms.

• Context is Key: High short-term losses in early bull markets may signal healthy shakeouts, while in late cycles they can deepen into longer downturns.

• Monitor Dynamically: Track changes in real time, as short-term holders react quickly to price swings.

Created By: The Short-Term Supply in Loss indicator is a widely applied tool in on-chain analytics .