Markets
What to know:
- In a plot twist you saw coming from three chapters away, Bitcoin‘s hashrate has taken a nosedive of 20%, sending the Hash Ribbon spiraling into a dramatic state of capitulation. Cue the dramatic music!
- Historically speaking-because history tends to speak when you least expect it-this kind of drop has heralded a mighty price recovery post-hashrate rebound. Think of it as the cryptocurrency equivalent of a phoenix rising from the ashes, but with less fire and more digital coins.
As the U.S. weekend storm decided to host a party for Bitcoin mining, higher costs have prompted companies to cut their computing power-or as the miners like to call it, their “hashrate.” Crypto traders are now clutching onto a metric known as the Hash Ribbon, which is built on the idea that when miners throw in the towel, Bitcoin prices often hit rock bottom. Talk about a game of musical chairs!
In the land of Bitcoin, when miners are forced to hit the brakes or shut down their machines, it usually precedes a period of stronger Bitcoin performance once the dust settles. This saga is captured by the Hash Ribbon, a complex-sounding contraption that tracks 30-day and 60-day moving averages of hashrate, courtesy of our friends at Glassnode.
Capitulation is signified by the short-term average taking a leisurely dive below the long-term average, which is painted in a delightful light red. The really bad news is that the worst phase is considered over only when the 30-day average crosses back above the 60-day, this time glimmering in a darker shade of red. Historically-because what else is there to do when the chips are down-when this recovery coincides with a transition from dark red to a lovely white, it’s typically the best time to throw your wallet at Bitcoin.
The hashrate, which is just a fancy term for the total computational muscle securing the Bitcoin blockchain, has plummeted approximately 20%, from roughly 1.2 zettahash per second (ZH/s) to about 950 exahashes per second (EH/s). And brace yourselves-the next difficulty adjustment is projected to drop by about 17%. This would be the steepest decline since July 2021, when China decided to play the villain and banned Bitcoin mining. Quite the soap opera, isn’t it?
The Hash Ribbon last waved its white flag of capitulation back in late November when Bitcoin was hovering around $80,000. Fast forward to now, and it’s lounging around $88,000, feeling rather smug.
A similar tale unfolded in mid-2024. After a Hash Ribbon capitulation and the yen carry trade unwind, Bitcoin dipped to about $49,000 in August before rallying to a lofty $100,000 by the following January. One might think it’s become a bit of a trendsetter.
During the grand collapse of the FTX crypto exchange in 2022, Bitcoin hit rock bottom near $15,000 amid miner capitulation. But fear not! Once the Hash Ribbon got its act together, the price bounced back to a respectable $22,000. It’s almost like watching a bad movie where the hero makes a miraculous comeback.
Now, the burning question in this tale of crypto woe is whether we’ll see a repeat performance, as Bitcoin prepares to enter another expansionary phase when the hashrate and the Hash Ribbon start behaving themselves again.
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2026-01-27 14:50