Market psychology revealed: unrealized losses of short-term holders and market turning points
In the digital asset market, the unrealized financial pressure of short-term holders (STH) has become a barometer of market sentiment. The STH-MVRV ratio recently fell below the equilibrium value of 1.0, revealing that new investors are facing unrealized losses and the market may enter a sensitive period. Historical data shows that continued below this equilibrium value may exacerbate investor panic and indicate a deepening bear market.
As unrealized losses accumulate, investors' expectations of selling heat up. When the STH-SOPR indicator is below 1.0, it clearly points to a high loss realization period for new investors, and market decision points are looming. It is worth noting that the overreaction of new investors to market fluctuations is a key driving force for the formation of market tops and bottoms.
Further analysis shows that in the current bull market adjustment, the slight deviation between the expenditure and holding cost basis may mean that the market has moderately overreacted when it falls below the key price. This finding provides investors with valuable insights into market psychology, helping to accurately grasp market turning points and formulate more robust investment strategies.
