The Short-Term Holder (STH) cost basis, which now stands at $28,000, means that the average recent investor is currently experiencing an average profit of approximately +20%. The chart provided illustrates the STH-MVRV Ratio, with red indicating periods when the market traded below the STH cost basis and green representing periods above it.
In 2021-22, there were instances where the STH-MVRV experienced relatively significant corrections, often exceeding -20%. In contrast, the recent August sell-off only reached a low of around -10%. It’s worth noting the relative shallowness of this MVRV decline compared to previous corrections. This suggests that the recent correction had substantial support, possibly serving as a precursor to the rally observed this week.
