Bitcoin (BTC) on-Chain Analysis: Hash Ribbon Shows Miner Capitulation

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In Brief
  • Mining indicators suggest BTC is approaching a bottom.

  • The difficulty ribbon compression indicator is giving a reading that is associated with bottoms.

  • Bitcoin hash ribbon indicator suggests that a bottom can be reached soon.

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Be[in]Crypto takes a look at Bitcoin (BTC) on-chain indicators that relate to miners, more specifically the difficulty ribbon compression and hash ribbon.

BTC difficulty

The Bitcoin mining difficulty is the estimated number of hashes that is required to mine a block. 

The difficulty has been increasing rapidly since Aug and reached a new all-time high on May 23. 

Despite the ongoing market correction, the difficulty is still close to its all-time high levels.

Difficulty ribbon compression 

The difficulty ribbon is an on-chain indicator that uses moving averages (MA) of Bitcoin mining difficulty. The difficulty ribbon compression adds a standard deviation to this indicator. Historically, values between 0.01 and 0.05 (highlighted in green) have indicated bottoms.

BTC crossed below the 0.05 threshold in the beginning of May and is currently at 0.045. While the low is inside the bottom area, previous bottoms have usually been reached closer to 0.02. 

More specifically, the 2015 bottom was reached at 0.024, the 2018 bottom was reached at 0.019 and the 2020 one at 0.020.

As a result, BTC has more room to fall according to the difficulty ribbon compression.

Hash ribbon

Unlike the BTC difficulty, which is calculated every two weeks, the hash rate is calculated every day. 

The has ribbon indicator shows if miners have capitulated by using the hash rate. Miners capitulate when their mining costs are higher than the rewards.  

In the chart, this is shown visually when the 30-day moving average (MA) crosses below the 60-day (blue). Afterwards, this created a light red area, which turns to dark red when there is a bullish cross. 

Historically, such crosses have preceded significant upward movements.

A closer look at the movement shows that a bearish cross occurred on June 7. 

So, if previous history is followed, miner capitulation is already starting to occur and a BTC bottom will follow soon.

 

For Be[in]Crypto’s latest bitcoin (BTC) analysisclick here

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.
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Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona graduate school of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst.

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