The latest trend in the Bitcoin “hash ribbon” indicator has just formed a pattern that has historically been a buy signal for the crypto.
Bitcoin Hash Ribbon Buy Signal Goes Off As Miner Capitulation Comes To An End
According to an analyst TwitterThe BTC miner capitulation stage seems to have finished today, after having been ongoing for 71 consecutive days.
Before trying to understand what the “hash ribbon” indicator does, it’s best to first take a look at the “hashrate” metric.
The Bitcoin Blockchain’s total computing power, measured as the hashrate by miners, is known. During bear markets, some miners’ income drops so low that running their operations becomes unprofitable for them. They are forced to turn off their machines during bear markets, which is recorded as a decline in the hashrate.
The major bottoms in bear markets have been found during periods of miner capitulations. This is when a lot of miners go bankrupt due to low revenue.
The hash ribbons are a way to identify these periods of miner capitulation. Charles Edwards, an analyst who created this indicator, used two different moving averages to measure changes in miner behavior.
Below is a chart showing the Bitcoin trend over the past few years.
Source:| Source: Charles Edwards on Twitter
You can see that capitulation periods for Bitcoin miners have been marked with the hash ribbons indicator.
The miners will be in a capitulation phase if the 30-day MA version drops below the 60 day MA line.
The 30-day MA is a break of the 60-day MA. This would indicate that these chain validators have stopped trying to capture the market.
A buy signal for crypto is sent when this type of capitulation-ending crossover of hash ribbons happens.
These buy signals are not all profitable. This happens when miner capitulations occur that last more than 2 years following any halving event.
The historic pattern of the “buy signal” has been repeated by the hash ribbons today as the current run of miners capitulating has ended after 71 days. It has also now been more than 2 years since the last halving event, which, going by the past trend, would suggest this is one of those rare “most profitable” buy signals for Bitcoin.
BTC Prices
At the time of writing, Bitcoin’s price floats around $21.3k, down 13% in the past week.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Featured image by Unsplash.com. Charts from TradingView.com