Hash Ribbon indicator signals buy after 1 year

Developed to assess the situation of miners, the Hash Ribbon metric returned to give buy signals after 1 year.

On-chain indicators are essentially developed through data taken from the blockchain, one of the main datasets being those that reference mining activity.

The metric we will be covering today was developed by Charles Edwards and was initially published in 2019 with some updates later. It mainly indicates the moment of the end of the capitulation period of miners and usually indicates medium/long-term buying moments.

Let's see what this indicator means and if it actually makes sense to buy according to these signals.

Hash Ribbon is one of the most famous on-chain indicators, calculated through the 30 and 60-day moving averages of the hashrate, or rate of computing power of the bitcoin network.

As the hash rate immediately responds to mining activity, we can visualize the moments of greatest pressure on miner activity, as higher hash rate means more miners connected, as well as the opposite.

Due to bad market conditions during bear markets, many miners are forced to shut down their machines, reducing the hashrate. As we recover from the uptrend in price, more miners are encouraged to turn on their machines, increasing the hashrate.

Using the two moving averages it is possible to clearly see these two trends in price and mining. When the short average (30d) crosses below the long one (60d) it signals the start of miner capitulation.

The indicator's buy signal occurs when the opposite happens, when the short average is inverted above the long one, thus ending the capitulation period.

Throughout history we had about 13 buy signals, the 14th being now on August 19th.

Most buy signals provided good entry points, befitting the completion of the capitulation and the start of a new price trend.

However, it is important to point out that there is no on-chain or technical indicator that is 100% accurate, there are statistical approximations consistent with the current market moment.

Hash Ribbon signals buy not only on bottoms, but often after the bottom of the market.

As we can see, all the signals were in short/medium term moments. However, some, for example December 2019 and August 2021 were not so good over a period of a few months, with drops below the buy zone.

Bitcoin is an exponentially growing asset with a clear trend towards mass adoption and institutionalization, so regardless of the indicator used, a long-term purchase will have great potential to offer good returns.

Even though Hash Ribbon is not always perfect, purchases in the indicator's signal range have proven to be quite efficient for good long-term returns.

Several other indicators converge towards a possible bottom zone, even if the price falls further, matching previous cycles, it does not invalidate an allocation.

This is not a buy recommendation, the global scenario remains pressured and Bitcoin may still suffer from macroeconomic issues, but this and other indicators have shown the high potential of the current region.

Do your own research and HODL.