Topic: Bitcoin Hash Ribbons Buy Signal 19/08 (Read 206 times)

Although still no buy signal confirmed on the Weekly and Monthly time-frames, due to lack of positive price action since the bullish crossover of the MA30 and MA60 hash rate values, hash rate remains strong and shows no signs of crossing bearish, despite the move down to $19.5K after the buy signal on the Daily time-frame at $20.8K.



Yesterday's average mining cost was estimated at $19,350, and despite price coming close to this, hash rate has maintained it's higher values this past week. Even with price briefly dropping below one of these estimates the other day, fortunately this hasn't caused miners to switch off and risk instigating another capitulation. Instead for now, the network remains strong and returning to growth.

https://en.macromicro.me/charts/29435/bitcoin-production-total-cost

Excluding "black swan" events, such as March 2020 and May 2021, the average draw-down after this buy signal is around -9% with a maximum of -15%, with price currently reaching -7% so far. It's worth noting however that this is only based on the Weekly buy signals that have to occur, but could also be applicable to signals on the Daily time-frame to some degree.

Thanks, yeah I do think that the bottom is in already, we are still defending $21k so again, another good indication that there could be no dip below the lowest low.

So still a good time to accumulate around $21k-$22k, and we should take advantage of that pattern and not to think of the bearish trend. Looking forward for next month, I do hope that we will somewhat return to a healthy $25k and sustain it.

To me it depends how it forms. If there are lower highs and horizontal support, aka a descending triangle, it's as bearish as they come. Not based on some prophecy, but rather based on buyers having decreasing momentum to push price to upside while sellers are stepping in at increasingly lower prices. That was 2018 as well as 2019 and why double, triple, quadruple bottoms make no sense in the bullish case.


To be honest I was feeling pretty short-term bearish earlier today as price returned to re-testing $21K for the 4th/5th time, but now I'm not so sure about re-testing $20k. Maybe price barts back up to $23K after all.

One interesting thing I noticed with the RSI on the 4hr since May is there has been the pattern of after <20 deeply oversold, previously it re-tested around 20 (green arrows) in order to make a lower low (as well as swing low), after getting rejected around the neutral level of 40. Despite the sideways looking bear flag, there hasn't been this rejection on the RSI despite anticipating this to play out, because like I said re-testing support for the umpteenth time isn't a bullish sign, and instead looked ready to form the bullish divergence we've seen in previous swing lows. "This time it's different" has therefore become a relevant argument imo.



All in all, my short-term bearish outlook is already turning neutral as bears fail to push prices below $21K, while the bulls fail to reclaim $22K and the 4hr RSI returns to neutral territory.

Me neither to be honest. Mainly because I do believe the bottom is likely in already, so dropping below $20K and turning the accumulation zone into distribution would be pretty bearish and indicating that lower lows are likely. Of course a double bottom is possible, around $18K or $19K depending on the time-frame, but personally not a believer in double/triple bottoms being bullish.
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Think I've been neutral since the last rally above 20k, leaning towards bearish, especially after what I'd say is disappointing attempts to hold above in sustained manner.

Double/triple bottoms, yeah we've seen plenty of those in 18/19, and again, hate pointing to cycles but I'd feel a lot more comfortable once we see that.

Currently still holding $21K. Looking bearish short-term but otherwise in long-term accumulation zone of $20K to $22K, so personally remaining neutral (mid-term) within this trading range.


Me neither to be honest. Mainly because I do believe the bottom is likely in already, so dropping below $20K and turning the accumulation zone into distribution would be pretty bearish and indicating that lower lows are likely. Of course a double bottom is possible, around $18K or $19K depending on the time-frame, but personally not a believer in double/triple bottoms being bullish.

We are still just above the threshold of $21,500, but I think we can close this week around that price, it seems the bleeding has stop and so it's good to see that we are goin to hold on it so that the buy signal will be present.

I also don't see the price going below $20k, or at least hitting the new lowest low, it seems that $17,500 will be indeed the lowest price that we will get in this bearish market or at least for this year.

Always nice to see this kind of update. Some bearish miner news this week from the conflict but don't think that affects ongoing miner operations. Wasn't so confident we'd get to that required >21k levels today after the slip up over the weekend and a brief dip below but it does look like the stage is set for the weekly buy confirmation.

Last week closed with hash rate signalling a recovery on the weekly time-frame, despite signalling a buy on the daily chart (OP updated).

While not uncommon, it's relatively unusual, with 80% of daily buy signals translating into weekly buy signals.


Fortunately the MA30 continues to increase while the MA60 remains relatively neutral, so the risk of further capitulation remains low at present while average mining cost remains below $20K and price is holding $21K. In summary, price will need to move higher, around $21.5K/$22K approximately, and close the week there, in order for the buy signal to appear with this indicator.

Despite maintaining $20,835 level for the Daily buy signal of this indicator, it's worth noting that today this indicator is no longer signalling a buy on the Weekly time-frame, only a hash rate recovery:



While this could become a "fake-out" as we've seen in the past, as the MA30 continues to increase it's distance with the MA60, it seems more likely the buy signal will be delayed until next week, as long as price can begin to move back to the upside. Currently average mining cost made a new low on August 19th at $16,555, which is not only benefical for the miners, but could help to explain the spike in hash rate on that day.  



For reference sake, it's quite usual for the buy signal to arrive the week or two after the hash rate recovery (green circle) has signalled, if not signalling the same week as recovery. Given that the current capitulation has lasted for 10 weeks now, it seems much more likely for a buy signal to arrive rather than a return to capitulation, as the latter is more common for shorter capitulations that have only lasted a few weeks.

The bull-trap signals are quite notable, they are when hash rate recovers but there isn't a buy signal, because there isn't positive price action since the recovery (ie there is a continued downtrend).

A good example of this would be July this year where hash rate recovered (green circle, see above) but there wasn't positive price action prior to further capitulation, so no buy signal occurred. Similarly in April and May last year, hash rate twice recovered (MA30 crossed the MA60), but again lacked positive price action and/or network growth, in April it was the former and in May it was the latter, hence further capitulation occured.

So in this case it could be a bull trap if there isn't a buy signal the end of the week, if price closes below $20,835 for example, the price at which hash rate signalled a recovery on the Daily time-frame.

For reference sake, this is more than possible if there is a drop in hash rate / price tomorrow, as the MAs have only just crossed over by a very small margin:

Thank you for sharing. How could one distinguish a buy-signal from a possible bull-trap? Is hash-power considered a lagging indicator? Just as quickly turned off as on (.. according to price, if it's 'profitable' to mine).

Then again, I go against that thought by saying that for some it's never unprofitable to mine in the long run, to a certain extent: it's not important at all the price in fiat paid; all that matters to the miner is more 'fresh block' sats - granted they can operate at a loss nonstop. Perhaps there's a 'failure' somewhere in this thought.

Daily chart signals (partial source)

1. $4.08, December 27th 2011
2. $5.09, May 20th 2012
3. $6.46, June 22nd 2012
4. $20.55, February 2nd 2013
5. $234, January 28th 2015
6. $234, May 2nd 2015
7. $238, May 28th 2015
8. $612, September 4th 2016
9. $3652, January 11th 2019
10. $7245, December 27th 2019
11. $7505, April 24th 2020
12. $9306, July 12th 2020
13. $19,226, December 2nd 2020
14. $44,612, August 7th 2021
15. $20,835, August 19th 2022

Weekly chart signals

1. $5.28, December 26th 2011
2. $6.35, June 18th 2012
3. $23.80, February 4th 2013
4. $227, January 26th 2015
5. $231, May 25th 2015
6. $3533, January 7th 2019
7. $7385, December 30th 2019
8. $7706, April 2020
9. $9303, July 2020
10. $19,375, December 2020
11. $43,829, August 2021
12. ...

As previously referenced in this thread, hash rate has been recovering this month and now for the first time since August 2021 a "buy signal" is appearing on all time-frames:

Daily chart: buy signal confirmed 19/08: $20,835



Weekly chart: hash rate recovered - buy signal pending confirmation



Monthly chart buy signal pending confirmation



This is currently the 10th buy signal on the Monthly time-frame in as many years, the 15th on the Daily time-frame and 12th on the Weekly time-frame which has always led to positive price action, even if not confirming a low in the market, or a sustained uptrend (such as December 2019 and August 2021). But otherwise a reliable indicator that network growth (based on hash rate) is returning, despite bearish sentiment.

More info on it's way...

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Previous topics:

2022: Bitcoin Hash Ribbon Update - Capitulation Again? | Bitcoin Hash Ribbons Capitulation Alert!
2019: Hash Ribbons Indicator confirms 10th buy signal in 9 years @ $7245