Bitcoin Hash Ribbon Metric Fails for the First Time Following FTX Crash

The Bitcoin Hash Ribbon metric had a good run when it came down to signal a buying opportunity.

However, the recent downturn of the market, induced by the FTX crash, has changed the tides.

• As explained by Capriole Investments’ Charles Edwards, the metric takes into account both the BTC mining difficulty as well as the hash rate to determine the miners’ capitulation.
• Since the former readjusts itself every roughly two weeks, while the latter does it daily, there could be some time differences. This is why Edwards advised people to look at the Hash Ribbon as a long-term model. The post reads,

“When the 1-month SMA of Hash Rate crosses over the 2-month SMA of Hash Rate, the worst of the miner capitulation is typically over, and the recovery has begun. Buying at these points of time yields incredible results.”

• BTC’s price has surged by up to 4-digit percentages in several months after such a cross occurred in the past.
• However, this has not been the case so far. Miners’ capitulation has been a hot topic within the community recently, especially since the formation of a death cross in late November.
• As such, CryptoQuant’s Dan Lim determined that “for the first time since the Hash Ribbon model’s golden cross, the dead cross came without the price of Bitcoin rise.”

• He attributed this to the massive and loud collapse of FTX, which ultimately resulted in a notable price drop for BTC to a two-year low.
• The declining hash rate, though, as well as the expected decrease in the mining difficulty, suggest that BTC could indeed be facing miners’ capitulation.