On-chain data shows that Bitcoin Hash Ribbons indicate that miners are still under tremendous pressure as they continue to capitulate.
Bitcoin’s tickers have yet to signal the end of miner capitulation
in mail On X day, CryptoQuant Community Manager Martin shared what the latest trend in Bitcoin’s hash bars looks like. “Hash bars” here refer to two moving averages (MAs) of Bitcoin’s 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 position between these chain validators.
When the hash rate increases, it means that new miners are joining the network and old miners are expanding their facilities. This trend indicates that chain validators are finding the network attractive now.
On the other hand, a declining indicator indicates that some miners have decided to disconnect from the blockchain, perhaps 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 determine whether a shift in miner behavior is part of a larger pattern.
The two bars that connect the indicator are the 30-day and 60-day moving averages of the hash rate. When the former crosses the latter, miners can be considered to be in capitulation. Similarly, a cross of the opposite type means that the group is back to feeling comfortable.
Now, here 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 moving average of Bitcoin’s mining hash rate crossed below the 60-day moving average in May, indicating the beginning of miner capitulation.
This development in Hash Ribbons was a confluence of the asset’s bearish momentum and the fourth halving. A “halving” refers to a periodic event that occurs every four years and cuts BTC block rewards in half.
Miners primarily earn their revenue through block rewards, so it’s easy to see how the halving would significantly impact the chain’s verifiers’ funding.
These rewards are distributed in Bitcoin, so a drop in the exchange rate of the asset against the US dollar means a further drop in the dollar returns for miners. Given these developments, it makes sense that miners have recently decoupled from the chain.
Last month, Hash Ribbons briefly experienced an opposite-type crossover, but the indicator has since been pointing to capitulation again. It’s hard to say how long it will take before miners see pressure ease.
Bitcoin price
At the time of writing, Bitcoin 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
Featured image by Dall-E, CryptoQuant.com, chart by TradingView.com