The Hash Ribbon indicator goes off, everyone is excited, but you are standing or sitting there mouth agape looking at your trading screen wondering what you missed out on. Experienced cryptocurrency speculators look at the Hash Ribbon signal and notice that it could be a wonderful indicator showing individuals the way.
But the way to where?
The way to a great positive momentum trend for bitcoin or another fantastic digital crypto that has been around for quite some time now. It is essential to clarify that this is something that is quite relevant to the bitcoin price as it could shoot off and grow exponentially.
Digital asset capital allocation firms and their management team are known to become a bit giddy when looking at the hash ribbon signal because they can expect to see a potential rise and bump in their digital holdings.
The signal indicates a buy signal in most cases and may kick off a buying spree by different participants in the market. We will take a dive into how the hash ribbon signal works and why it is relevant in the crypto markets today.
Let’s find out more about this trading concept and see how we can implement it into our trading regimen. We’ll find out about a few of its appearances before we go further into the concept.
The Hash Ribbon Signal Appearances
The Hash Ribbon indicator came about several times in the year 2020. One can notice that the first time it took place within the year 2020 was on the 25th of April where the price of Bitcoin would rise to over $7,450.
It would continue to elevate in price to over $10,000 midway that summer before rising even more over the latter half of that year. Bitcoin would then gradually head even further over the course of that year to over $15,000.
These hash ribbons present within that year did surely indicate buy signals and for some it served as a confirmation to double down on their purchase.
Different experts would note in 2020 that the bull run would begin and it did start. Further experts note that the Hash Ribbon indicator may occur once annually. Recall that this indicator shows hope and digital asset robustness because it will account for components like hash rates and mining complexity present within the bitcoin system.
What You Must Know about the Hash Ribbon Indicator
The Hash Ribbon indicator brings about optimism and joy among cryptocurrency speculators and traders for quite a few reasons; here is the simple concept and what it can mean in your trading process. The simple concept behind the Hash Ribbon signal is that the leading digital asset within the cryptocurrency market will descend when those who process transactions through mining start to divest themselves of bitcoin to recoup their investments and stem losses.
The reason why it can signal a purchase opportunity is because it can trigger some angst, anxiety, and hot hands where prices are at a more favorable point.
That means while those who don’t believe in the leading digital asset’s future are selling it, savvy individuals may be buying it.
Now, recall that miners have a habit of divesting themselves of bitcoin when they see that it doesn’t make sense at the current moment to participate within the network. They do so because it seems as if it may be a tad bit cost intensive to continue to participate within the system.
One might notice that this event can take place when bitcoin quickly descends as it normally does making it to where it may not yield as much as value as the miners require at that particular point in time. Now, recall that it is an event that can happen because bitcoin could have retraced from $14,500 or another price point to $7,000 or even lower.
A steep correction where the price of bitcoin is cut in half or by a third is quite painful to all from holders of the digital asset to miners but even more so to miners because they expend energy daily and have regular costs to run their operations.
Indeed, the mining process is quite crucial in bitcoin and miners must see that their investment will pay off in the present or believe that it will hold over the long-term.
For instance, some experts note that the gravity of the collective negative emotion in the price in really distressed bitcoin markets combined with the acceleration of price depression by miner capitulation can provide a fantastic buying period.
What the Hash Ribbon Indicator Assesses
Experts look to the Hash Ribbon indicator to genuinely understand what is taking place within the bitcoin markets. They need to see what the general emotion and feeling is within the markets and need to know about the level of miner capitulation present therein.
But how can they look at the varying level of miner desertion of their bitcoin holdings?
The indicator will account for a singular month as well as a two month SMA of the btc hash rate. As you know the hash rate is very important within the bitcoin network because it shows the level of power and strength within the processing part of the network.
The processing component of bitcoin is what makes it strong and viable for its many participants from those who send bitcoin to others to those that are merely trading and moving the asset around.
Networks of computers must process all this bitcoin movement with hash power and the more that participate, the stronger the network can tend to be.
Again, experts were able to note that this took place approximately two times in the year of 2020 for several reasons. The first time it took place, it did so because of the halvening process that everyone was expecting on May 11 2020. Then the next one took place later that year for other market oriented reasons.
Now, the halvening was a perfect storm for the ribbon to occur in the charts. Why? Well, the halvening indicates that there will be less rewards present within the system. That means that miners who don’t have the stomach to wait it out over the short terms would be running and jumping to sell a reasonable or great portion of their bitcoin to shore up for tougher times.
The hash rate would likely drop in the short term as should the price while they try to avoid losses. See, miners at that halvening did not want any uncertainty and were more interested in securing the value that they had at that present time.
The backdrop was not in bitcoin’s favor either as bitcoin was coming out of a price slump and gradually but very slowly rising in price.
But before that, individuals could notice that the indicator would only go off about one a year, in most cases. As such, it made sense why miners were skeptical about future prices and adjusted their work level.
But due to several reasons, their costs remained the same or decreased in a few areas because of rains, and other aspects dealing with their relationship with electricity providers.
The ribbon still came about because of the several refinements taking place within the network.
But you may still wonder how does it kick off a bull run? How does that make any sense?
How Hash Ribbons Indicate Hope and Bright Futures
The truth is that these indicators or signals show that bitcoin market participants are in an uncertain state. A substantial portion may believe that it can go higher while others can believe that it can go lower or stay the same in the near term or even the long-term.
That means that some people thinking bitcoin will course correct while others may have reason to believe that it can continue to move forward and head in a positive direction. If you notice that the price begins to go up, it means that people are buying it for many different reasons.
It means that people are accumulating the leading digital asset and analysts will look at other aspects such as the month and the three month moving average space present within exchange reserves to show that the potential risks may be at the present time.
If risk patterns within this particular concept are near lows then it can show that upside potential is quite likely.
Traders Appreciate Accuracy
The reason why people appreciate this indicator is because they are all about accuracy and the odds. If they know that an asset has a high probability of going up, then it means that they should buy it, if they see that it has a high probability of going down, they should make money by shorting it.
But the Hash Ribbon has always come about at the right time and shown the right patterns to where if someone were to purchase bitcoin when viewing the indicator, they were able to increase their portfolio value.
Further, experts can notice that they don’t need to know much about the fundamental components of the leading digital asset but rather look to data points and indicators such as this one to make decisions.
That can make their lives easier as they try to decipher the moves they should make while simplifying the information that they place into their formula.
Of course, there are a few who see that this indicator needs more tests and more time to show that it is 100% accurate. Remember that we learned above that this indicator occurs, on average, at least annually? That means that this has some correlation with aspects like the general movements of bitcoin and its price patterns but may not always confirm that the bull is rearing its head.
How to use Hash Ribbon and Key Facts about the Hash Ribbon
Hash ribbons are, at the current moment, specific to the bitcoin network. It is a measure of the present hash rate and the complexity of the mining process.
Speculators and other parties tend to look at this factor when they understand the fortitude of miners, with the critical question being; are miners divesting bitcoin assets? If so, how much?
This signal may indicate prime opportunities to purchase bitcoin and decrease the costs of buying bitcoin while maximizing upside.
The analyst, Charles Edwards, is the mind behind the hash ribbon.
How to Use the Hash Ribbon
The hash ribbon concept revolves around the idea of simple moving averages that relate the mining power and complexity within the system.
Indeed, it is an intriguing concept because the hash rate is quite fast and is factored into the indicator each day; at the same time, the complexity of mining tends to move at a snail’s pace as it will only change around 2,000 blocks or so.
The simple way to view this indicator is to notice that the moving averages in the mining power and mining complexity cross over, conclude that the miners are selling.
The first key point to look at is the mining power or hashrate crossover, you will see action here first. Then you will look at the 30 day and 60 day MA of the mining power. You will notice that the perfect time to acquire bitcoin is when the 30 day ascends above the 60 day mining power data.
The historical data indicates that bitcoin declined only slightly when this indicator appeared and it was valuable to purchase bitcoin within the right time frame when this ribbon appeared. The bitcoin price would decrease and then ascend a significant amount.
The best results occur when one acquires BTC at the 30-day HR crossing over the 60-day HR MA when there is strong interest in pushing the BTC price upward.
The critical point here is that the price declines will be between 4% and 12%, and the overall value increase is useful.
To use the indicator, you can conduct it manually or add the indicator within your charts in different places ranging from TradingView to other dashboards.
They occur, on average, annually and are usually present with the halvenings. As such, one could expect this indicator to appear at the next halvening.
That is the core essence of the hash ribbon concept and one that you can utilize as you conduct your bitcoin trading.
As always have fun, and good luck in your trading.