In his latest announcement, Charles Edwards, CEO of Bitcoin and digital asset hedge fund Capriole, stated tiled a significant market indicator in the latest issue of the company’s newsletter, Update #51. Edwards points to the activation of the “Hash Ribbons” buy signal, a notable event that has indicated prime Bitcoin buying opportunities in the past.
Bitcoin Hash Flash Ribbons Buy Signal
The Hash Ribbons Index, first introduced in 2019, uses mining data to predict long-term purchasing opportunities based on miners’ economic pressures. The signal is due to the convergence of Bitcoin’s short-term and long-term moving averages, especially when the 30-day moving average drops below the 60-day. According to Edwards, the event “in the vast majority of cases has been synchronized with broader Bitcoin market weakness, price volatility, and significantly long-term value opportunities.”
As Edwards emphasized, the current capitulation of miners began two weeks ago and coincides with corrections in the mining sector after the halving. This period often leads to the suspension of operations and even bankruptcy among less effective miners. Edwards notes: “As we see today, these mining rigs will typically be decommissioned within a few weeks after the halving, causing the hash rate to decline.”
Despite miners’ historical profitability, especially with increased block fees from modern 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 comes at a time when miners are generally profitable, it would be a sin not to recognize this rare opportunity,” Edwards said.
Hash ribbons have not been without criticism, with each appearance sparking debate about the current usefulness and accuracy of the signal. Edwards addressed this criticism by referring to a signal from the previous year that correlated with Bitcoin trading in the $20,000 range, strengthening the predictive power of the indicator. “Each event sparks a discussion about what it means today or why the current signal maybe doesn’t matter,” Edwards explained.
Edwards recommends that the safest approach to using Hash Ribbons is to wait for confirmation in the form of a renewed augment in the hash rate and a positive price trend. He concludes: “The safest (lowest volatility opportunity) allocation for the Hash Ribbons strategy is to confirm a Hash Ribbon purchase, which is triggered by a renewed increase in the Hash Rate (30DMA>60DMA) and a positive price trend (defined by 10DMA>20DMA price).”
Broader market context
Moving from technical to contextual issues, Edwards discusses the changing regulatory landscape that has recently become more favorable to cryptocurrencies. The SEC’s approval of the Ethereum ETF classifying ETH as a commodity marks a significant shift in the regulatory approach to cryptocurrencies and reflects growing institutional acceptance.
“The reclassification of Ethereum and the approval of its ETF represent a key shift in the government’s stance on cryptocurrencies,” notes Edwards. “This could lead to increased institutional involvement and potentially greater stability in cryptocurrency markets.”
Additionally, Edwards points to macroeconomic factors that may affect the value of Bitcoin. The expansion of the M2 money supply and the Federal Reserve’s stance on interest rates are intended to stimulate economic activity. However, Edwards warns of the potential long-term consequences of this policy, such as inflation, which could augment Bitcoin’s attractiveness as a hedge against monetary devaluation.
“Bitcoin was conceived as an alternative to traditional financial systems in times of economic stress,” notes Edwards. “Current economic policies reinforce the fundamental reasons for Bitcoin’s existence and may lead to increased adoption.”
From a technical perspective, Edwards provides an analysis of Bitcoin’s price movements, highlighting the recent breakout and consolidation above critical resistance levels. It sets a conditional medium-term price target of $100,000, provided the market maintains current momentum and the monthly close remains above the critical $58,000 threshold.
At the time of publication, the price of BTC was $69,008.
Featured image created with DALL·E, chart from TradingView.com
