After surging more than 28% over the past 16 days, Bitcoin’s price was rejected at the key resistance of $68,500 on Sunday. Since then, BTC’s price has seen a slight pullback, 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, “BREAKING: Hash Ribbon’s buy signal just went off.”
Why Bitcoin Hash Ribbons Are Important
This statement is significant, as hash ribbons have historically been a reliable indicator, with an 84% accuracy rate in predicting major Bitcoin price lows. Hash ribbons are based on the interaction between Bitcoin Hash Rate—the total computing power used to mine and process transactions—and the market price of Bitcoin.
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Analysts note that a drop in the price of Bitcoin or an increase in operating costs, such as electricity, could cause miners to temporarily halt operations. This period, known as a ‘Minas Gerais capitulation,’ is crucial because the resumption of mining activity is typically seen as a bullish sign for the price of Bitcoin.
The indicator itself is derived from the Bitcoin hash rate moving averages; specifically, the 30-day and 60-day moving averages. A “buy” signal occurs when the short-term moving average crosses above the long-term average after a period of miner capitulation, indicating that the worst of the sell-off may be over and a recovery phase is likely imminent.
Crypto analyst Jelle, known on X as @CryptoJelleNL, commented“The hash ribbons are showing that the minor capitulation is over! This signal is printed after every halving event and after major corrections – and suggests that the next leg of the expansion is coming. Time for 80k+?”
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Further supporting the bullish sentiment, the @DaFinancialPage account observed in X, “Miner Capitulation. The blue buy signal from the Hash Ribbons indicator appeared 19 times. Of these, 16 marked Bitcoin’s macro low, giving it an 84% win rate. The three times it didn’t, a major correction followed.”
Thus, the appearance of the Ribbon hash signal ‘Buy’ can be interpreted as a strong indicator for the upcoming high phase in the Bitcoin market cycle. However, the three cases where the signal failed to predict a significant increase highlight the risks and uncertainties inherent in each indicator.
Notably, technical analysis is closely aligned with the predicted target of $80,000 discussed by Jelle. The 1.272 Fibonacci extension is priced at approximately $79,337. However, before a new all-time high can be explored, Bitcoin must secure support at the 0.618 Fibonacci retracement level at $65,943 on the daily chart, which could act as a critical juncture. The subsequent levels of 0.786 Fibonacci at $69,384 and 1.0 Fibonacci at $73,767 serve as potential interim targets.
At the time of writing, BTC was trading at $66,403.
Featured image created with DALL·E, chart from TradingView.com