Short Term Holder SOPR (STH-SOPR) is a variant of SOPR that takes into account only spent outputs younger than 155 days. As such, STH-SOPR serves as an indicator for assessing the behaviour and profitability of investors who are more likely to have recently entered the market.
Statistically, UTXOs younger than 155 days are more likely to be spent, and as such are generally considered to be part of the liquid circulating supply. STH-SOPR filters for only these 'young coins' to estimate the amount of profit or loss that is realised by this cohort. This provides insight into the behaviour and sentiment of new investors who are more likely to react to market volatility by spending their coins.
STH-SOPR is calculated by taking the SOPR value only for spent outputs younger than 155 days.
A common assumption when performing analysis on spending patterns is to categorise coin holders using the following framework:
Short-Term Holders (coin lifespan < 155-days) are more likely to be new and/or inexperienced market entrants, particularly in bull markets. This cohort are more likely to react to short-term market volatility and re-spend their coins as the marginal buyer/seller.
Long-Term Holders (coin lifespan > 155-days) are more likely to be smart money investors who accumulate cheap coins in the bear and/or early bull cycle, and distribute expensive coins late in the bull cycle. This cohort is less sensitive to market volatility, particularly when coins held are at an unrealised gain.
In the immediate period after a coin is accumulated, the owner is likely to experience market volatility around their cost basis, creating a natural incentive to react. This effect generally lessens over both time and as price appreciates away from the cost basis. The degree of profit or loss realised by this cohort can an provide indication around aggregate sentiment for these new entrants. It can also provide insight on supply dynamics such as whether marginal buyers/sellers are holding, taking profits or panic selling.
The STH-SOPR metric generally provides a more reflexive indicator than the standard SOPR metric. The chart below shows the standard SOPR metric (blue) compared to the STH-SOPR (orange) demonstrating this greater reflexivity and responsiveness of STH-SOPR. The magnitude of both peaks and troughs are generally larger than SOPR as a result of:
Relay transactions (<1hr lifespan) being filtered out (as in aSOPR).
Herd mentality amongst marginal buyers and sellers acting/spending in unison.
Influence of market volatility and recency bias to realise significant gains/losses soon after a coin was purchased (i.e. a coin bought shortly before a surprise sell-off is more likely to re-spend and realise a loss).
Glassnode (March 2020)
Rafael Schultze-Kraft - Breaking up On–Chain Metrics for Short and Long Term Investors