After rising over 28% in 16 days, Bitcoin price was rejected at key resistance at $68,500 on Sunday. Since then, BTC price has been showing a compact decline, but according to Charles Edwards, founder of Capriole Investments, investors can expect the bullish momentum to continue. Edwards shared the chart below and stated via X: “URGENT: Hash Ribbon buy signal just fired.”
Why Bitcoin Hash Ribbons Are Vital
This finding is significant because hash bands have historically been a reliable indicator, with an 84% accuracy rate in predicting major Bitcoin price bottoms. Hash bands are predicted based on the interaction between Bitcoin’s hash rate — the total computing power used to mine and process transactions — and Bitcoin’s market price.
Analysts note that a drop in the price of Bitcoin or an escalate in operating costs, such as electricity, could cause miners to temporarily halt operations. This period, known as a “miner capitulation,” is crucial because the resumption of mining activity is typically seen as a bullish signal for the price of Bitcoin.
The indicator itself is derived from Bitcoin’s hash rate moving averages; specifically, the 30-day and 60-day moving averages. A “buy” signal occurs when the shorter-term moving average crosses above the longer-term average after a period of miner capitulation, indicating that the worst of the sell-off may be behind us and a rebound is likely coming.
Cryptocurrency analyst Jelle, known on X as @CryptoJelleNL, he commented“The hashing ribbons show that the small capitulation is over! This signal is printed after every halving event and after major corrections – and suggests that the next stage of expansion is just around the corner. Time for 80k+?”
Further support for the bullish sentiment comes from the @DaFinancialPage account recorded on X, “Miners capitulating. The blue buy signal of the Hash Ribbons indicator appeared 19 times. Of these, 16 marked Bitcoin’s macro low, giving it an 84% win rate. The 3 times it didn’t, there was a major correction.”
So, the appearance of a “Buy” signal on the hash ribbon can be interpreted as a mighty indicator of the next bullish phase in Bitcoin’s market cycle. However, the three instances where the signal failed to predict a significant escalate underscore the inherent risk and uncertainty of any indicator.
Interestingly, the technical analysis aligns closely with the projected $80,000 target discussed by Jelle. The 1.272 Fibonacci extension is located around $79,337. However, before a up-to-date all-time high can be explored, Bitcoin needs to secure support at the 0.618 Fibonacci retracement level at $65,943 on the daily chart, which could be a critical juncture. The next levels at 0.786 Fibonacci at $69,384 and 1.0 Fibonacci at $73,767 serve as potential interim targets.
At the time of going to press, the BTC price was $66,403.
Featured image created with DALL E, chart from TradingView.com
