Are we on the verge of another Bitcoin miner capitulation?

Definition

The Hash Ribbon is a market indicator that assumes that Bitcoin tends to reach a bottom when miners capitulate, i.e., when Bitcoin becomes too expensive to mine relative to the cost of mining.

The Hash Ribbon indicates that the worst of the miner capitulation is over when the 30d MA of the hash rate crosses above the 60d MA (switch from light red to dark red areas).

Times when this occurs, and the price momentum switches from negative to positive, have shown to be good buying opportunities (switch from dark red to white).

Quick Take

• Last week, CryptoSlate analyzed the state of the mining industry and believed miners were in a much stronger position than last year.
• That is certainly the case, but according to the hash ribbon metric, the 30-day and 60-day moving averages are about to converge.
• Historically, this has negatively impacted the price of Bitcoin because miners have to sell their coins to cover operational costs.
• While Bitcoin is considered cheap, mining operational costs such as energy are high, so miners will need to offload their stored coins, which increases liquidity and can push prices down.
• For the past two summers, we have seen some form of mining capitulation, May 2021 saw the China mining ban, and last summer with the collapse of Terra Luna.

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