This buy indicator shows that the price of Bitcoin is ready to explode

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One of the best bitcoin buying indicators flashed this week, suggesting the price is about to explode.

The following is taken from a recent edition of Deep Dive, Bitcoin Magazinethe premium markets newsletter. To be among the first to receive this and other on-chain bitcoin market analysis straight to your inbox, Subscribe now.

On August 9, one of the best bitcoin buying indicators issued a buy signal:

Hash ribbons.

the Hash ribbons indicator created by Charles Edwards uses the thirty- and sixty-day moving averages of the bitcoin hash rate to determine when the miners’ capitulation occurred, and uses it to estimate local bitcoin funds.

Below is the history of the bitcoin price and each time the hash ribbons indicator flashed:

Surrender of minors

Hash ribbons are an effective and historically accurate buying indicator for bitcoin, as they use changes in bitcoin’s hash rate to measure the capitulation of miners in the bitcoin market.

During times when mining operations shut down their rigs, this shows that it is not profitable to mine. The hash rate drops, blocks are mined slower than the 10 minute block goal, and eventually the difficulty will adjust downward to encourage these miners to reconnect.

This is typically the process in which miners turn off their machines in large numbers, which is then followed by the hash ribbon indicator signaling surrender, followed by a possible buy signal.

However, the cause for the massive drop in the hash rate was not entirely caused by increased competitiveness in the mining industry resulting in lower profits, but rather by a political decree in what ended up being the biggest. nation-state attack on bitcoin, by the arms of the Chinese Communist Party.

Over the past six weeks, the average bitcoin hash rate declined by 53%, and although the cap event was more contrived, the drop in the hash rate still had a very significant impact on miners’ income. for those who have always stayed connected.

As the July monthly report shows, the daily earnings of bitcoin miners fell from a high of $ 67.5 million per day in May to a low of $ 19.8 million per day in early July.

Not only were the remaining miners in a hurry as the difficulty dragged on amid four direct downward adjustments, mining operations in China, which were suddenly faced with moving all of their operations out of the country, almost certainly had to liquidate. reserves, a majority of which can be assumed to have been stored in bitcoin (as is the case with all miners, which aim to store as much bitcoin as possible).

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