GlossarySTH Cost Bands
STH Cost Bands
This study overlays an approximation of the cost basis of short-term holders (STH) on the price, plus bands at multiples of its dispersion. You can see how far the price is above or below the entry price of buyers from roughly the last five months, and whether that is already extreme for this group.
How to read it
- Above the cost basis, buyers of recent months are on average in profit; below it, at a loss. In uptrends, the cost basis often acts as support where corrections end. If the price stays below it for longer, that often counts as a transition into a weaker market phase.
- +2σ and +3σ: The unrealized profits of the most recent buyers are unusually high. Profit-taking becomes more likely, hence the name distribution zone.
- −2σ and lower: The most recent buyers are deep in the red; this is where they typically give up. Historically a zone of accumulation.
Limitations
- Approximation: Real cost bases weight by coins moved. Here, a day with huge volume counts as much as a quiet one. The study uses no on-chain data, only the price.
- Bitcoin only. Intended for 1D to 1W; on 4H and 1H the window becomes very long (930 and 3,720 candles).