While the weekend’s U.S. storm disrupted bitcoin BTC$87,708.96 mining as higher costs hit profitability and led companies to cut computing power, or hashrate, crypto traders will be focusing on a metric known as the Hash Ribbon, an indicator built on the premise that the price of the largest cryptocurrency often reaches a low during periods of what’s known as miner capitulation.
In the past, periods when miners were forced to slow down or shut off machines have preceded stronger phases for bitcoin once conditions stabilize. That’s reflected in the Hash Ribbon, an indicator the tracks the 30-day and 60-day moving averages of hashrate, on Glassnode.
Capitulation is signaled when the short-term average falls below the long term average, shown in light red. The worst phase is considered over once the 30-day measure crosses back above the 60-day, represented by darker red. Historically, when this recovery aligns with a shift in price momentum from negative to positive, marked by a transition from dark red to white, it has coincided with long-term buying opportunities.
The hashrate, the total computational power securing the Bitcoin blockchain, measured, has fallen roughly 20%, from around 1.2 zettahash per second (ZH/s) to approximately 950 exahashes per second (EH/s). That means the next difficulty adjustment, which is used to maintain consistent 10-minute block times, is projected to decline by about 17% This would mark the largest difficulty drop since July 2021, when China banned bitcoin mining.
The Hash Ribbon last showed capitulation in late November, when bitcoin formed a low around $80,000. It’s now around $88,000.
A comparable pattern emerged in mid 2024. Following a Hash Ribbon capitulation and the yen carry trade unwind, bitcoin bottomed near $49,000 in August before rallying to $100,000 the following January.
During the collapse of crypto exchange FTX in 2022, bitcoin bottomed near $15,000 amid miner capitulation. Once the Hash Ribbon normalized, the price rebounded to about $22,000.
The key question now is whether the pattern repeats and bitcoin enters a renewed expansionary phase when hashrate and the Hash Ribbon begin to normalize.