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bitcoin miner hash ribbons
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Bitcoin Hash Ribbons Indicate Post-Halving Miner Capitulation Has Begun

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin, Cryptocurrency news, Technical analysis
Reading Time: 3 mins read
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Hash ribbons, an indicator used to depict the health of Bitcoin miners powering the network, has just signaled capitulation for an unprecedented 4th time in this market cycle. And according to the tool, post-halving miner capitulation may have only just begun.

Bitcoin Miners Are Capitulating Due To Post-Halving Production Costs

As a failsafe mechanism ensuring the long-term health of the Bitcoin network, the halving is designed to not only reduce supply but purge the network of smaller time miners.

When the supply is suddenly reduced with each halving, the cost of production essentially doubles overnight. Miners whose operating expenses outweigh the revenue being generated close up shop, and sell remaining holdings to avoid significant loss.

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Related Reading | Three’s a Crowd: Final Bitcoin Miner Shakeout Points to an Epic Rally 

During each and every previous Bitcoin market cycle consisting of an uptrend leading to a top and bear market bottoming process, there were three distinct periods where miners that secure the network capitulated.

This time around, miners are capitulating for an unprecedented fourth time, according to an indicator called Hash Ribbons.

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bitcoin hash ribbons

Bitcoin‘s Hash Ribbons signal capitulation, and when it occurs, it later issues among the most historically profitable buy signals when the network returns to a healthier state.

At that point, the weakest miners are gone, and what’s left are more efficient miners that are able to hold onto any newly mined Bitcoin until the next bull market.

While a fourth capitulation event is unprecedented, the third, and previously final capitulation has always occurred following each halving.

During this cycle, the Black Thursday selloff that sent Bitcoin to under $4,000 and rocked the stock market, was a black swan nobody saw coming and caused a third capitulation event.

This post-halving capitulation is more in line with past cycles, and may – as it has shown in the past – create the final opportunity to buy at low prices before the asset’s next bull market.

But how low could it go, and how long could capitulation last? Looking at past miner capitulation periods, they typically last roughly one month. This entire time isn’t limited to the downside, however, the downside at the start is often severe.

The longest stretch recorded of miner capitulation was back when Bitcoin was trading at $6,000 in November 2018. Later, the asset fell to $3,000 and traded within that range for months while accumulation took place.

Related Reading | Bitcoin Trades Below Production Cost, Miners Are Better Off Buying 

Miners spent nearly three full months capitulating, then in January the Hash Ribbons issued a buy signal. Less than 6 months later, the cryptocurrency was trading once again at $13,000.

When the Hash Ribbons finally signal to buy again, it could very well be the last time to buy Bitcoin at these lower prices before its next bull market truly begins.

Tags: bitcoinbitcoin minersbtcbtcusdBTCUSDTcryptohash ribbonsxbtusd
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a global remote work leader with a decade of award-winning content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter at @tonyspilotroBTC and feel free to drop me a line if you would like to work together.

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