The worst of Bitcoin’s 50% drawdown may already be behind us.
The hash ribbon indicator is close to signaling the end of three months of miner capitulation. According to Glassnode data, the surrender period is one of the longest on record.
This indicator compares the 30-day moving average of hashrate to the 60-day moving average and is based on the observation that Bitcoin often bottoms when miners are under the greatest financial stress. Capacity occurs when mining revenues fall below operating costs and inefficient miners are forced to shut down and sell their machines. $BTC This is a reserve fund to cover electricity, debt, and miscellaneous expenses. This combination lowers the hashrate and puts sustained selling pressure on the market.
A recovery signal is triggered when the 30-day hash rate moving average moves back above 60 days, indicating that miners are back online, stress on the network is eased, and that moment is nearing. Historically, when this crossover coincides with an improvement in price momentum, it marks a strong accumulation zone.
Since the indicator first reversed in late November, Bitcoin has fallen from around $90,000 to a low of nearly $60,000 in early February, before recovering to around $65,000 at the time of writing.
Such large corrections commonly occur during minor stress events. Since 2011, mine declines have occurred about 20 times, including in January 2015, December 2018, and December 2022, most of which coincide with local or large-scale bottoms.
The hash rate, the total computational power that secures the network, is now recovering, indicating a newfound confidence among miners.
At the same time, Bitcoin is currently trading below its estimated average cost of production of $66,000, a level often associated with high valuations, according to CheckonChain data. The last time this issue occurred was in November 2022. $BTC It bottomed out around $15,500.
