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Bitcoin is poised to rally as hash ribbons signal a “buy” signal.
The well-respected hash ribbon indicator has flashed “buy” for the first time this year, bringing renewed hopes to Bitcoin aficionados. That implies Bitcoin (BTC) might be due an “explosive rally” as miners come out of a long-term period of capitulation.
The hash ribbons indicator has signaled bullishness, measurable as a key metric of Bitcoin’s long-term price performance. The indicator monitors two moving averages about the Bitcoin hashrate the combined processing power miners dedicate to the network. It follows the 30-day moving average and the 60-day moving average of the total hashrate.
More importantly, when the 30-day moving average is below the 60-day moving average, a message is broadcast that miners are selling at losses and creates a cycle referred to as “capitulation.” On the flip side, when the 30-day moving average crosses over 60-day moving average, a very reliable buying signal is provided that historically leads to large BTC price gains.
Hash ribbons exit capitulation: Bitcoin eyes potential bullish surge
Three days ago, for the first time in over two and a half months, the hash ribbon indicator exited the “capitulation” stage. The time before that was back in August 2023, with BTC/USD below $30,000. Needless to say, speculation is beginning to rise that Bitcoin will set up an epic bullish run in the very near future.
“BTC just called for a rare hash ribbon ‘Buy,'” popular trader Mikybull Crypto wrote to his more than 40,000 followers on X, formerly called Twitter, and in a larger offering of his price analysis. In a separate post he advised traders to “get ready for a massive rally,” further sending positive sentiment through the community.
“Whenever this happens, an explosive rally follows.”
Much optimism around the view is strongly supported by raw data, where monitoring resource MiningPoolStats now shows the hashrate on Bitcoin at 676 exahashes per second as of July 22. That underlines increased processing power and dedication by miners at current levels all factors that would be considerably important in contributing to network stability and future price action.
With such vote of confidence, Bitcoin’s price continues to be rocky in shorter timeframes. Bitcoin has come off recent lows and has now crossed the $68,000 level. However, as the sell side continues to have its doubts. Part of the factors are the continuing outflow to financiers of the liquidated exchange Mt. Gox and how the US takes in spot Ether exchange-traded funds (ETFs).
Mt. Gox payouts impact
The full implications of Mt. Gox payouts are hard to lay under the rug. The bankrupt exchange from 2014 had left many people waiting for compensation through Bitcoins. Now these payouts are gradually being processed, and a fear of increased selling in the market with the ability to temporarily slow down the price-growth of Bitcoin resides with the community.
What is more, the market reaction to the U.S. spot Ether ETFs new adds one more level of complication to a short-term outlook of Bitcoin. While the introduction of these ETFs is seen as a positive natural event for the cryptocurrency market, it also increasingly attracts investors, partly taking away some of the capital from Bitcoin, which represents at least some limiting factor on its immediate upside potential.
Regardless, overall sentiment is tilted positively towards the “buy” signal these hash ribbons provide and the rumored incoming Bitcoin rally. Historically, miner capitulations have been one of the dominant forces driving Bitcoin supply-side dynamics. When miners begin to capitulate, they reluctantly sell some of their holdings fueling short-lived price drops. Once that all plays out, in most bitcoin price discovery upwards tends to emerge on further buying pressure.
Due to these short-term challenges in the market, hash ribbons have already slipped from the “capitulation” to “buy” state, fostering the prospect that at least a price surge has yet to come. This should add to the short-term challenges and dynamism of the market, but the long-term perspective remains optimistic. Extreme caution is called for across the board, and traders should also prepare themselves to take part in an impending price surge powered by restored confidence and participation from Bitcoin miners.
