In his latest dispatch, Charles Edwards, CEO of the Bitcoin and digital asset hedge fund Capriole, has flagged a significant market indicator in the latest edition of the firm’s newsletter, Update #51. Edwards points to the activation of the “Hash Ribbons” buy signal, a notable event that has historically indicated prime buying opportunities for Bitcoin.
Bitcoin Hash Ribbons Flash Buy Signal
The Hash Ribbons indicator, first introduced in 2019, utilizes mining data to predict long-term buying opportunities based on miners’ economic pressures. The signal arises from the convergence of short-term and long-term moving averages of Bitcoin’s hash rate, specifically when the 30-day moving average falls below the 60-day. According to Edwards, this event has “in the vast majority of cases synced with broader Bitcoin market weakness, price volatility and significantly long-term value opportunities.”
The current Miner Capitulation, as highlighted by Edwards, began two weeks ago and coincides with post-halving adjustments in the mining sector. This period often leads to the shuttering of operations and even bankruptcies among less efficient miners. Edwards notes, “Just as we are seeing today, these mining rigs will typically then be phased out over several weeks following the Halving resulting in falling hash rates.”
Despite the historical profitability of miners, especially with increased block fees from new applications such as Ordinals and Runes, Edwards suggests that the market should not overlook the current opportunity signaled by the latest Miner Capitulation. “While this capitulation is occurring when miners have broadly been profitable, we would be remiss not to note this rare opportunity,” stated Edwards.
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The Hash Ribbons have not been without their critics, with each occurrence stirring debate about the current relevance and accuracy of the signal. Edwards addressed these criticisms by referencing the previous year’s signal, which correlated with Bitcoin trading in the $20,000 range, reinforcing the indicator’s predictive strength. “Every occurrence brings some debate about their relevance today, or why the current signal perhaps doesn’t count,” Edwards explained.
Edwards recommends that the safest approach to leveraging the Hash Ribbons is by waiting for confirmation through renewed hash rate growth and a positive price trend. He…
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