One of the best buy indicators in bitcoin flashed this week, suggesting the price is primed to explode.
- Author:
- Dylan LeClair[1]
- Publish date:
One of the best buy indicators in bitcoin flashed this week, suggesting the price is primed to explode.
The below is from a recent edition of the Deep Dive, Bitcoin Magazine's premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now[2].
On August 9, one of the best buy indicators in bitcoin flashed a buy signal:
Hash Ribbons.
The Hash Ribbons Indicator[3] created by Charles Edwards [4]uses the thirty- and sixty-day moving averages of bitcoin hash rate to determine when miner capitulation has occurred, and uses this to estimate local bitcoin bottoms.
Below is the history of the bitcoin price and every time that the hash ribbons indicator has flashed:
Hash ribbons serve as such an effective and historically accurate buy indicator for bitcoin because it uses the changes in bitcoin hash rate to measure miner capitulation in the bitcoin market.
During periods where mining operations are turning off their rigs, it shows that it is uneconomical to mine. Hash rate declines, blocks are mined slower than the 10-minute block target, and eventually difficulty will adjust downwards to encourage these miners to plug back in.
This is typically the process in which miners turn off their machines in large numbers, which is subsequently followed by the hash ribbon indicator signaling capitulation, followed by an eventual buy signal.
However, the cause for the massive decrease in hash rate wasn’t entirely caused by increased competitiveness in the mining industry driving profits down, but rather because of political
