Hash ribbons have just formed a death cross which has been a leading indicator for Bitcoin miner capitulation in previous cycles.
Hash Ribbon indicators use simple daily moving averages to identify changes in hash rate trends. They are often used as a long-term signal to indicate macro bottoms on the Bitcoin price chart.
A bearish cross is a signal of a strengthening downtrend which, in this instance, spells a reversal in hash rates which are still near their peak levels.
There it is. Hash Ribbon miner capitulation confirmed. Triggered by the $10B FTX fraud and subsequent collapse, Bitcoin miners are now going bust and Hash Rate is trending down. pic.twitter.com/TorX7PzrNu
— Charles Edwards (@caprioleio) November 28, 2022
The Tale of Hash Ribbons
The signal was also observed by industry analyst Will Clemente who said, “we are potentially entering into a double dip miner capitulatory period,” before adding:
“Hash ribbons have just initiated a bearish cross, historically this has been a leading indicator of miner capitulation.”
The last time this death cross occurred was in June following the Luna collapse capitulation.
According to Glassnode, the hash rate seven-day moving average is now 13.7% off all-time highs. Furthermore, mining difficulty is projected to adjust by -9% a week from now.
Hash rates have tanked over the past week as more miners power down their rigs. The metric is currently down 14% from its all-time high earlier this month. Today’s hash rate is 234 EH/s (exahashes per second), according to Blockchain.com.
Mining difficulty, which measures the competition between miners for the next block, is at a peak of 36.9 T. However, this will automatically adjust downwards with the falling hash rate.
Profitability, or hash price as it is often known, is at its lowest ever level of around $0.056 per day per TH/s. This metric has slumped 82.5% over the past 12 months.
A miner capitulation usually adds more selling pressure which means a higher potential for more price declines in the short term.
Bitcoin Price Outlook
Bitcoin prices are slightly up on the day, with the asset trading at approximately at the time of writing. There was another pullback in late Sunday trading, but overall, Bitcoin has been consolidating in this range since the FTX-induced capitulation earlier this month.
BTC is currently trading at a two-year low and is down 76.5% from its November 2021 all-time high. The current state of the market mirrors that of late 2018 following the November capitulation back then. There was no sign of recovery until the summer of the following year.
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