Analysis: Hash Ribbon Indicator Mimicking November 2022, Suggests Current Sell-off May Have Bottomed

BlockBeats News, February 25th. Analysts suggest that the worst phase of Bitcoin's 50% retracement may be over, as the Hash Ribbons indicator signals the end of a three-month period of miner capitulation selling. Bitcoin often bottoms out when miners face the most financial pressure. Capitulation occurs when mining revenue falls below operational costs, forcing less efficient miners to shut down their machines and sell their Bitcoin reserves to cover electricity bills, debts, and operational expenses, leading to a drop in hash rate and sustained selling pressure in the market. When the 30-day hash rate moving average crosses back above the 60-day moving average, it indicates that miners are coming back online, Bitcoin network stress is easing, and this moment is approaching.

Looking back at history, there have been about 20 instances of miner capitulation since 2011, most of which coincided with local or major bottoms, including January 2015, December 2018, and December 2022. The hash rate is currently rebounding, and miner confidence is also recovering in sync. Meanwhile, Bitcoin is currently trading below its estimated average production cost of $66,000, a level often seen as a deep value area. The last time this happened was in November 2022, when Bitcoin bottomed around $15,500.