Hash Ribbon, an indicator that determines miner capitulation based on when the market hits its bottom, ended on August 18 after two months of declining miner participation. The end of the period marked the third longest surrender in history, according to data analyzed by CryptoSlate.
However, the recent meltdown in the crypto industry seems to have taken a toll on Bitcoin’s price, with recent on-chain data revealing the highest negative hash rate adjustment for 2022.
Hash ribbons have not yet turned off to mark another bull run, as has been the case for the 2020 market. Unfortunately, the indicator warns investors to expect another period of price unsustainability.
Hash Ribbon uses 30-day and 60-day simple moving averages to estimate miner participation across the BTC network. A Minor surrenders when the 30-day SMA falls below the 60-day SMA, and the end of surrender begins when his 30-day SMA rises above the 60-day SMA.
The latest hash ribbons show that both MAs are nearing crossover and the 30-day SMA is almost below the blue line, thus indicating a surrender phase. Additionally, the current setup resembles the Hash Ribbon metric in June 2022 when BTC fell from his $31,150 to $20,000.
The economic cost of mining Bitcoin compared to the current price of the coin has proven to be prohibitive for miners. This explains why the past two months of hash rates have been wiped out.
If the surrender phase begins in November/December, it will likely mark the longest phase in BTC’s history.
Bitcoin’s hash rate is declining towards record levels in a sign that miners are shutting down, as shown in the Glassnode chart below. Hashrate has fallen to the last observed annual low in July 2021.
