What Is STH-RUL? Is BTC Emerging From a Deep Bear Market? KTX Analyzes the Risks of the Bull-Bear Transition
As BTC enters a bull-bear transition phase, a new question is emerging:
What is the bigger risk now — getting trapped again, or missing the next major rally?
The original author, Murphy, recently suggested using STH-RUL to assess changes in the market’s risk structure.
Simply put, STH-RUL measures how much unrealized loss short-term Bitcoin holders are currently carrying.
When the indicator reaches extremely high levels, it means many recent market participants are underwater and financial stress is elevated. When it steadily declines from those highs, it suggests that the pressure on short-term holders is easing.
According to the original author, the more important shift now is:
The market may be moving away from “deep bear-market risk” and toward “bull-bear transition risk.”
What Is STH-RUL?
STH stands for Short-Term Holders.
STH-RUL can be understood as:
The unrealized losses currently held by short-term holders as a percentage of Bitcoin’s total market capitalization.
Because the metric is normalized by market capitalization, it can be used to compare conditions across different market cycles.
The original author describes it as a:
“financial stress indicator” or “pain index.”
When STH-RUL rises sharply, it means investors who recently bought BTC are carrying substantial unrealized losses.
According to the author’s framework:
Above +2 standard deviations: market stress has increased significantly;
Above +5 standard deviations: the market is typically under deep bear-market stress;
A sustained decline from elevated levels: short-term holder stress is easing, potentially signaling the late stage of a bear market;
Below are 2 standard deviations: the author believes the market can be considered to have moved clearly beyond a deep bear-market environment.
These thresholds are better used to observe changes in market conditions. They do not mean that BTC will automatically rise once the indicator reaches a particular level.
Why Does a Decline in STH-RUL Matter?
A bear market does not end simply because BTC rebounds.
The more important question is:
Has the market’s internal loss structure changed?
Deep in a bear market, many short-term investors are underwater and fear tends to be elevated.
As coins continue changing hands at lower prices, new investors enter at lower cost bases and the overall cost structure of the market gradually improves.
Even if BTC becomes volatile again, the unrealized losses borne by investors may no longer be as severe as they were during the deepest stage of the bear market.
This can create a situation where:
Prices are still correcting, but the market is no longer as fragile as it was during the deep bear phase.
That is why the key signal from STH-RUL is not any single rise or decline in BTC.
What matters more is:
Whether investors’ unrealized-loss pressure is declining over time.
KTX Crypto View: Don’t Look at BTC Price Alone
From the KTX Crypto perspective, STH-RUL is better treated as a market risk-structure indicator, rather than a standalone buy signal.
For example, when BTC pulls back, investors can monitor:
If BTC declines but short-term holder losses do not return to extreme levels, while leverage and capital flows remain relatively stable, the nature of that correction may be very different from a decline during a deep bear market.
The KTX Market page currently provides market data including price information, fear and sentiment indicators, aggregate futures open interest, market-wide liquidations, and 7-day BTC ETF net flows. These metrics can provide additional context when evaluating changes in Bitcoin market risk.
Users can also access the KTX BTC/USDT Spot Trading page to monitor BTC prices, 24-hour price changes, trading volume, and order-book data.
On-chain indicators tell us what is happening in the market — they do not tell us what we must buy right now.
Short-term corrections can still occur frequently during a bull-bear transition.
FAQ
What is STH-RUL?
STH-RUL refers to Short-Term Holder Relative Unrealized Loss. It measures the unrealized losses held by short-term Bitcoin holders relative to BTC’s total market capitalization and can be used to assess short-term financial stress in the market.
Why can STH-RUL be used to observe bear-market stress?
When a large share of recent BTC buyers are underwater, STH-RUL tends to rise. The higher the metric, the greater the overall unrealized-loss pressure on short-term holders.
What does STH-RUL above +2 Std mean?
According to the original author’s interpretation, a reading above +2 standard deviations generally indicates that unrealized-loss pressure among short-term holders has increased significantly.
Does STH-RUL above +5 Std mean BTC is in a deep bear market?
The original author views readings above +5 standard deviations as an extremely high-stress zone that has historically been associated with deep bear-market conditions. However, this is based on historical observations and should not be used alone to identify market tops or bottoms.
Why can falling STH-RUL be a positive signal?
If BTC experiences price declines while STH-RUL continues to fall, it suggests that the overall loss pressure on short-term holders is easing. This may indicate an improving cost-basis structure and a possible transition from the late stage of a bear market toward a bull-bear transition phase.
Conclusion
STH-RUL provides a perspective that goes beyond price action alone:
How far BTC has fallen is not the only thing that matters. How much financial stress that decline creates for investors matters as well.
If STH-RUL continues to decline, it suggests that unrealized-loss pressure among short-term holders is easing and that the market’s risk structure may already be different from the deep bear-market phase.
This is also why investors entering a bull-bear transition should not necessarily continue waiting for prices associated with the previous bear-market bottom.
The more important question is:
Is the market returning to an extreme-stress environment?
If the overall risk structure continues to improve, future corrections do not necessarily mean BTC will revisit its previous laws.
Rather than trying to identify the “perfect bottom,” it may be more useful to understand which stage of the market cycle Bitcoin is currently in.
Original Post
2026 Bull-Bear Transition Series 3 — RUL Reveals Changes in the Market’s Risk Structure
STH-RUL means “Relative Unrealized Loss.” It represents the total unrealized losses currently held by STHs as a percentage of Bitcoin’s total market capitalization. It is normalized by market cap so that it can be compared across different cycles.
I view it as an indicator of “financial stress” or the market’s “pain level.”
When the green peak rises above +2 Std (red line), it means STHs are suffering substantial losses and their pain level is surging. This is usually a signal that the market is entering a bear market.
When it exceeds +5 Std (purple line), the market has entered the deep bear phase.
After that, coins continue changing hands at lower prices, bringing the overall cost basis down. Prices may make new lows, but STH-RUL continues falling from its highs, meaning the pain is easing. This is a signal that the market is entering the late stage of the bear market.
When STH-RUL falls below -2 Std (the red dashed box in the chart), we can basically conclude that the market has emerged from the deep bear phase.
The risk structure is then reset, and the market enters a “bull-bear transition period.”
Looking at the previous two cycles, the 2019–2020 transition period was highly volatile, while 2023 was noticeably milder. STH-RUL clearly shows the difference:
In 2020, the “pain level” surged above +2 Std again and even exceeded +5 Std. In 2023, however, the highest reading only moved above -1 Std (green line).
If this cycle resembles 2023, I think it may become very difficult for those who missed the rally to get back in. That is because market expectations tend to reference 2020, with investors waiting for another deep pullback before entering.
They would not even consider the “shallow corrections” seen in March and June 2023. As a result, they kept waiting while prices moved higher, eventually losing their timing completely and potentially missing the entire cycle.
By the same logic, expectations in the current cycle will naturally use 2023 as a reference. That is normal. But what matters is:
Your expectations should at least not be below the market average — and perhaps should be slightly higher. There is no need to pursue perfection deliberately. Being approximately right can be enough.
At this stage, the risk of “missing out” is actually much higher than the risk of “getting trapped.”
Original author: Murphy
X: @Murphychen888
Published: September 14, 2026
Original post: https://x.com/Murphychen888/status/2099302109372149804
The original post mainly discusses the unrealized-loss pressure reflected by STH-RUL and how the market’s risk structure differs across bull-bear transition periods. These views represent the author’s personal market analysis and should not be interpreted as a definitive prediction of future market direction.
Cryptocurrency markets are highly volatile. This article is provided for informational and educational purposes only and does not constitute financial or investment advice. On-chain indicators rely on model assumptions and historical data, and past cycle behavior does not guarantee future results.
What Is STH-RUL?