On-chain data shows that Bitcoin hash rate ribbons signal that miners are still under immense pressure as their capitulation continues.
Bitcoin Hash Ribbons Haven’t Signaled the End of Miner Capitulation Yet
In a job On X, CryptoQuant community manager Maartunn shared what the latest trend in Bitcoin hash rate ribbons looks like.Hash ribbons“Here we are referring to two moving averages (MA) of Bitcoin mining hash rate.
THE mining hash rate measures the total computing power that miners currently have connected to the BTC network. This metric can be seen as a reflection of the situation among these chain validators.
When the hash rate value increases, it means that new miners are joining the network and old ones are expanding their facilities. Such a trend implies that these chain validators now find the network attractive.
On the other hand, the indicator registering a decline suggests that some miners have decided to disconnect from the blockchain, potentially because they find it unprofitable to mine on it.
Miners play an important role in the network, and these trends, if they occur on a large scale, could have potential implications for Bitcoin. The Hash Ribbons indicator helps identify whether a change in miner behavior is part of a larger pattern.
The two relevant ribbons for the indicator are the 30-day and 60-day moving averages of hash rate. When the former crosses below the latter, we can consider that miners are capitulating. Similarly, a crossover of the opposite type implies that this cohort is comfortable again.
Now here is a chart that shows the trend of Bitcoin hash rate ribbons over the past year:
The two lines seem to have witnessed a cross recently | Source: @JA_Maartun on X
As the chart above shows, the 30-day moving average of Bitcoin mining hash rate crossed below the 60-day moving average in May, signaling the start of miner capitulation.
This evolution of Hash Ribbons is the result of the confluence of the bearish dynamics of the asset and the fourth Halving.Reduce by half” refers to a periodic event occurring every four years that halves BTC block rewards.
Miners primarily generate their revenue through block rewards, so it’s easy to understand how the halving would significantly affect the finances of these chain validators.
These rewards are distributed in BTC, so the drop in the asset’s USD exchange rate means a further reduction in dollar revenue for miners. Given these developments, it makes sense that miners have recently disconnected from the chain.
Last month, Hash Ribbons briefly experienced an opposite-type crossover, but the indicator has since signaled capitulation again. It’s hard to say how long it will be before miners see the pressure ease.
BTC Price
At the time of writing, Bitcoin is trading at around $56,200, down more than 10% in the past seven days.
Looks like the price of the asset hasn't made much recovery yet | Source: BTCUSD on TradingView
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com
