On-chain data shows that Bitcoin Hash Ribbons signal that miners are still under immense pressure as their capitulation continues.
Bitcoin Hash Ribbons Still Need to Signal the End of Miner Capitulation
In a after On X, CryptoQuant community manager Maartunn shared what the latest trend in Bitcoin Hash Ribbons looks like. The “Hash ribbons“This refers to two moving averages (MAs) of the Bitcoin mining hashrate.
The mining hashrate measures the total computing power that miners currently have connected to the BTC network. This metric can be considered a reflection of the situation among these chain validators.
When the value of the hashrate goes up, it means that new miners are joining the network and old miners are expanding their facilities. Such a trend implies that these chain validators now find the network attractive.
On the other hand, the indicator shows a decrease, which indicates that some miners have decided to disconnect from the blockchain. Possibly because they do not find it profitable to mine on it.
Miners play an important role in the network, and these trends, if they happen on a large scale, could have potential implications for Bitcoin. The Hash Ribbons indicator helps identify whether a shift in miner behavior is part of a larger pattern.
The two ribbons relevant to the indicator are the 30-day and 60-day MAs of the hashrate. When the former crosses below the latter, the miners can be considered as capitulating. Likewise, a crossover of the opposite type implies that this cohort is comfortable again.
Below is a chart showing the trend in Bitcoin Hash Ribbons over the past year:
The two lines seem to have witnessed a cross recently | Source: @JA_Maartun on X
As you can see in the chart above, the 30-day MA of the Bitcoin mining hashrate already dropped below the 60-day MA in May, signaling the beginning of miner capitulation.
This development in the Hash Ribbons was a confluence of the asset’s bearish momentum and the fourth Halving. The “Halving“refers to a periodic event that occurs every four years that halves BTC’s block rewards.
Miners earn their revenue primarily through block rewards, so it’s not hard to understand that the halving would have a drastic impact on the finances of these chain validators.
These rewards are given in BTC, so the asset’s USD exchange rate dropping means a further reduction in dollar revenue for miners. Given these developments, it makes sense that miners have been disconnecting from the chain lately.
Last month, Hash Ribbons briefly saw a crossover of the opposite type, but the indicator has since signaled capitulation again. It is difficult to say how long it will take for miners to see the pressure ease.
BTC price
At the time of writing, Bitcoin price is trading at around $56,200, down more than 10% over the past seven days.
Looks like the price of the asset hasn't made much recovery yet | Source: BTCUSD on TradingView
Main image from Dall-E, CryptoQuant.com, chart from TradingView.com