Bitcoin’s price surprised many in the crypto community to a certain extent. At press time, the market’s biggest coin was $43.3k. Let’s dive deep and analyze the signals displayed by key indicators before we examine whether Bitcoin will be able continue its uptrend.
Trend in hash rates
Bitcoin’s hashrate was at its November 2019 lows of 86.2 million TH/s until recently. This has been improving since July. This metric has seen a remarkable rise in readings over the past ten working days, from 98 million to 109 million TH/s.
It is important to note that the hashrate increases as more miners try to mine Bitcoin. Traders are often more inclined to mine more when the coin’s value is higher during these phases. Even though the price does not change due to a recovering hashrate, miners tend to be more profitable during these times.
Hash Ribbon and its significance
The Bitcoin ecosystem is a vital part of miners. Their sell-HODL actions have a significant impact on the Bitcoin market price. Let’s take a look at the hash ribbons indicator to see what they are doing as a community. This indicator provides information about the long-term Bitcoin price and is typically broken down into three phases.
The beginning of the “miner capitulation” phase is usually indicated by the first phase. As miners give in, the hash rate tends to decrease. This is a sign of decreasing competition in the mining sector. The indicator’s circle color usually changes between grey and light green during this stage. As you can see, the Bitcoin market has been through this stage quite a few times, since 2020.
The next phase marks the end to miner capitulation. The hash rate increases and mining activity rises again. This phase is marked by the appearance of a bright green indicator dot and a slight uptake in Bitcoin’s price. The chart shows that the green dot usually flashes right before rallies.
Only in the third phase does the hash ribbon display the ultimate buy signal. It typically appears in the third phase of a rally, when Bitcoin’s price gains momentum. The blue dot is usually preceded by a series green dots.
What is the current situation?
Bitcoin was still in its initial stage for most of June and July. The narrative started to change towards the end last month. The charts’ green color became more dense in August, and the final buy signal was just flashing at the time of writing. In fact, Capriole Investments’ founder Charles Edwards highlighted the same in a recent tweet and said,
“The largest long-term Bitcoin buy signal is currently firing”
This indicator flashes a blue dot after each successive set of green dots more often than not. As you can see from the attached chart, there have been exceptions in recent years. The projections made by this indicator should be taken with a grain.
What can we expect from the next few days?
Bitcoin’s price broke above its trend line at the time of writing. This trend line was what had stopped Bitcoin’s mid-April rally. Notably, Bitcoin’s price touched this line briefly in mid-May but didn’t go above it.
A typical bull flag is expected to emerge if the current breakout is confirmed within the next few days. If the price does not break above $37k, it could fall back to the support area.