In today’s on-chain analysis, BeInCrypto looks at two indicators, Hash
Ribbon and Difficulty Ribbon Compression, to determine the health of the market from the miners’ perspective.
The Hash Ribbon Sponsored Moving Averages (MA) have formed a bullish cross, potentially suggesting that the capitulation period for miners is over. Difficulty Ribbon Compression has moved above 0.05, further supporting this possibility.
measures the computing power that is brought online by BTC miners. In order to mine a block, mining machines solve complex calculations. The higher the hash rate, the higher the number of such calculations performed per second. Sponsored
Hash ribbon uses the hash rate to determine if miners are in the process of surrendering. Miners are considered to be capitulating when mining costs are higher than rewards. They are colored light and dark red in the chart below.
Historically, these periods have typically been associated with local or macro market bottoms.
The indicators also use the 30- and 60-day moving averages to determine when these capitulation periods end.
A bullish cross occurred on August 9, as seen by the color change from light to darker red.
Compression BTC difficulty
Mining difficulty estimates how many hashes are needed to mine one block. It adjusts every 2016 blocks, which is once every two weeks.
Therefore, this adjustment
lags behind the hash rate by two weeks, as the latter is calculated daily.
The Difficulty Ribbon Compression indicator uses the standard deviation to better determine its value. A low value (those between 0.01-0.05) usually indicates that the bottom has been reached, using the normalized standard deviation to determine the values given by the difficulty ribbon. Low values (those between 0.01
a 0.05) have historically represented periods near the bottom. Chart courtesy of Glassnode
The index has been rising since early July and peaked at 0.167 on July 28. Although it has been falling since then, it is still above the 0.05 upper threshold.
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