LEARN LTH/STH SUPPLY RATIOINDEX IN 3 MINUTES ——BLOCKCHAIN 101

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Let’s get back to the lesson itself.In the world of cryptocurrency, behind every price rise or fall lies the most fundamental question: who actually holds the coins?

Some people hold on no matter what, come rain or shine; others buy and then rush to sell just days later.One way to measure this “patience” in holding coins is the LTH/STH Supply Ratio Index (Long-Term Holders / Short-Term Holders Supply Ratio).

This article will get you started in 3 minutes and help you master it in 10, covering everything from concept to application—so that by the end, you’ll be able to interpret the signals from this indicator yourself.

What Are LTH and STH?

1） LTH and STH are two of the most common groupings in blockchain on-chain analysis.

LTH (Long-Term Holders): Addresses or wallets that have held a specific crypto asset for 155 days or more.
They’re usually steadfast investors, not swayed by short-term volatility—more like “believers” or long-term strategists.
STH (Short-Term Holders): Addresses that have held coins for less than 155 days. They’re more likely to be speculators or short-term traders, easily influenced by market sentiment.

This 155-day threshold wasn’t set at random—it’s a behavioral dividing line discovered in on-chain research: historically, holders who’ve crossed this time frame are much less likely to sell in the short term.

2） How Is the LTH/STH Supply Ratio Index Calculated?

The formula is straightforward: LTH/STH Supply Ratio = (Coins held by LTH) / (Coins held by STH)

Example: If LTHs hold 14 million BTC and STHs hold 4 million BTC, the ratio would be 14,000,000 / 4,000,000 = 3.5. This means long-term holders control 3.5 times the supply of short-term holders.

What Can This Indicator Tell Us?

Essentially, this ratio is the market’s “patience index.” It reflects the risk state and potential trend of the market:

High Ratio → Stable Market
Most coins are in the hands of long-term holders, selling pressure is low, and panic-driven crashes are less likely. Historically, this ratio tends to be high in the late stages of a bear market or during consolidation periods.
Low Ratio → Restless Market
More supply is in the hands of short-term players, who may cash out at any time. This is common in the mid-to-late stages of a bull market and signals an intensifying bubble.
Trend in the Ratio

Continuous rise → LTHs are accumulating, and market capital is shifting toward long-term investment.
Continuous fall → STHs are increasing, and market sentiment is leaning toward short-term speculation.

Why Is This Indicator Useful?

Because it doesn’t look at price—it directly examines the on-chain distribution of funds, making it less susceptible to market noise.

Practical scenarios:

Assess if a bull market is overheating: If the ratio keeps falling, it means short-term capital is flooding in. In this case, the bull market may be near its peak, and risk is building.
Spot the end of a bear market: During a bear phase, the ratio slowly rises as short-term speculators are flushed out, leaving only long-term believers holding coins. When the ratio reaches a historic high and starts to plateau, a trend reversal is often near.
Use alongside other on-chain indicators: While this indicator alone is solid, pairing it with metrics like MVRV Z-Score or net exchange inflows can improve accuracy.

LTH/STH and Price

Many assume: rising ratio → price will definitely rise.
In reality, it’s not a direct price predictor—it’s more of a sentiment thermometer.

High ratio → more patience in the market, but if the macro liquidity environment is bad, prices can still stay sluggish.
Low ratio → more restless sentiment, but it won’t necessarily crash immediately—volume and capital flows need to be considered.

How to Use This Indicator in Trading?

Trend Confirmation
If you’re a medium-to-long-term investor, you can use it to identify market phases:

Bear market bottom → high ratio, more patience
Bull market top → low ratio, more restlessness

Risk Management
When the ratio is very low and prices keep hitting new highs, consider gradually taking profits or reducing exposure.
Combine with Price and News
Indicator signals + macro bullish/bearish news make it easier to judge short-term sentiment shifts.
Common Misconceptions

Myth 1: High ratio means price will definitely go up. → Not necessarily; the ratio can stay high for a long time while price moves sideways.
Myth 2: Low ratio means price will definitely fall. → In the early stages of a bull run, the ratio can also be low because short-term capital has just arrived.

Conclusion

The LTH/STH Supply Ratio Index is like a market “holding confidence thermometer.” It helps us distinguish whether the market is dominated by “diamond hands” or “paper hands,” and thereby assess the stability of a trend.