I saw someone say BTC’s STH-MVRV is currently "perfectly replicating the three-stage bottoming pattern from 21–22," and that it’s about to rebound. I want to talk about a blind spot in this kind of analysis.
First, what is this indicator: STH-MVRV = the market value of the short-term holders’ coins ÷ cost basis. Falling below 1.0 means this group of short-term funds is overall at a loss; rising above 1.0 means they are broadly back in profit. So its real value is to tell you whether short-term funds are currently "trapped" or "in profit"—it is a state indicator. $ETH
But "three-stage bottoming" or "W-bottom variant" is a different matter: that is a shape manually drawn afterward by picking it out of the chart. Once you allow the words "variant," almost any period of oscillation around 1.0 can be forced into a "bottoming fractal." A model that can explain every movement has no predictive power.
And the statement "once it stabilizes above 1.0, the reversal is confirmed on the right side" is itself a tautology—after a breakout and stabilization, prices often rise, of course, but the key question of whether it can truly hold is something no one knows in advance; it can only be confirmed afterward. Look at that 21–22 period: STH-MVRV made many false breakouts and false breakdowns around 1.0. $BTC
So my suggestion is: use STH-MVRV as a "state thermometer"—to see whether short-term funds are underwater or in profit, and whether they are grinding around 1.0; do not use it to count waves or predict the "end of the third bottoming stage." If you really want to participate, wait until it has stayed above 1.0 for a period of time, then confirm with capital flows, and trade from the right side, rather than rushing in on the left side by counting patterns.
History does rhyme, but "rhyme" can only be heard after the fact; in advance, hearing every fluctuation as the same melody is exactly how people miss the move and get trapped.
For research purposes only, not investment advice, and no coin recommendations.
#Bitcoin #OnChainData #STHMVRV
First, what is this indicator: STH-MVRV = the market value of the short-term holders’ coins ÷ cost basis. Falling below 1.0 means this group of short-term funds is overall at a loss; rising above 1.0 means they are broadly back in profit. So its real value is to tell you whether short-term funds are currently "trapped" or "in profit"—it is a state indicator. $ETH
But "three-stage bottoming" or "W-bottom variant" is a different matter: that is a shape manually drawn afterward by picking it out of the chart. Once you allow the words "variant," almost any period of oscillation around 1.0 can be forced into a "bottoming fractal." A model that can explain every movement has no predictive power.
And the statement "once it stabilizes above 1.0, the reversal is confirmed on the right side" is itself a tautology—after a breakout and stabilization, prices often rise, of course, but the key question of whether it can truly hold is something no one knows in advance; it can only be confirmed afterward. Look at that 21–22 period: STH-MVRV made many false breakouts and false breakdowns around 1.0. $BTC
So my suggestion is: use STH-MVRV as a "state thermometer"—to see whether short-term funds are underwater or in profit, and whether they are grinding around 1.0; do not use it to count waves or predict the "end of the third bottoming stage." If you really want to participate, wait until it has stayed above 1.0 for a period of time, then confirm with capital flows, and trade from the right side, rather than rushing in on the left side by counting patterns.
History does rhyme, but "rhyme" can only be heard after the fact; in advance, hearing every fluctuation as the same melody is exactly how people miss the move and get trapped.
For research purposes only, not investment advice, and no coin recommendations.
#Bitcoin #OnChainData #STHMVRV
