Bitcoin (BTC) on-chain: miners indicator points to capitulation

Be[in]Cointelegraph delved into Bitcoin (BTC) on-chain indicators for miners, including Difficulty Ribbon Compression and Hash Ribbon.

Bitcoin Difficulty Ribbon Compression

The Difficulty Ribbon is an on-chain indicator based on moving averages (MA) of Bitcoin mining difficulty. Then, the difficulty ribbon compression adds a standard deviation to better determine if the market is close to a bottom, or floor.

Throughout its history, values ​​between 0.01 and 0.02 have been associated with bottoms.

In May 2022, this indicator moved into oversold territory (<0.05) and currently stands at 0.0162. The only other time it showed a value lower than this was in January 2021 with 0.0137.

Interestingly, the previous three market cycles (black circles) were reached at higher values.

To be more specific, the 2015 low occurred at 0.024, the 2018 low occurred at 0.019, and the 2020 low occurred at 0.020.

So, due to this data, the Ribbon Compression Difficulty Indicator suggests that Bitcoin price is close to a bottom.

Difficulty Ribbon Chart – Glassnode

The Bitcoin Hash Tape

The hash tape indicator helps to determine if miners have capitulated. Miner capitulation occurs when the rewards of crypto mining are lower than their fees.

In the chart, this phenomenon is indicated when the 30-day moving average (MA, in green) crosses below the 60-day moving average (in blue). This generated a light red area that turns dark red in the event of a bullish crossover.

Within the price history, these crossovers have been followed by considerable upside moves.

Hash Ribbon Chart – Glassnode

Further analysis of the move shows that a bearish crossover took place on June 7th. This crossing has therefore been in place for 42 days. The current bottom of BTC was reached 11 days after this crossover, more precisely on June 18th.

In 2015 (black circle), the crossing had been in place for 40 days. However, the bottom was reached 25 days after crossing.

In 2018 (blue circle), the crossing lasted 61 days. That said, the low was reached after 45 days.

Finally, in March 2020 (yellow circle), the crossing was in place for 36 days. Interestingly, the low was reached five days before this crossover.

Thus, based on this data for the current movement, it is possible that the cross will remain for about 20 more days, but it is also possible that a low has already been reached.

Hash Ribbon Chart – Glassnode


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