{"id":37654,"date":"2022-07-20T13:48:49","date_gmt":"2022-07-20T10:48:49","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=37654"},"modified":"2025-08-29T19:40:08","modified_gmt":"2025-08-29T16:40:08","slug":"what-is-the-hash-ribbons-indicator","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/what-is-the-hash-ribbons-indicator\/","title":{"rendered":"What is the Hash Ribbons indicator?"},"content":{"rendered":"<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Key points<\/h2>\n<ul class=\"wp-block-list\">\n<li>Hash Ribbons is an indicator designed to identify bitcoin\u2019s major price bottoms.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>The metric gauges market sentiment and the likelihood of miner capitulation driven by a falling bitcoin price or rising operating costs.<\/li>\n<\/ul>\n<ul class=\"wp-block-list\">\n<li>It rests on the premise that miners are both the most resilient cohort in downturns and the most sensitive to market recoveries.<\/li>\n<\/ul>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Who created Hash Ribbons?<\/h2>\n<p>Hash Ribbons was developed in 2019 by Charles Edwards, founder of the investment firm Capriole Investments. It followed his earlier work on identifying bitcoin price bottoms using <a href=\"https:\/\/forklog.com\/en\/news\/what-are-hashrate-and-mining-difficulty-in-cryptocurrencies\">the network hash rate<\/a> (Hash Rate Capitulation).<\/p>\n<p>Edwards drew on <a href=\"https:\/\/woobull.com\/introducing-the-difficulty-ribbon-the-best-times-to-buy-bitcoin\/\" target=\"_blank\" rel=\"noreferrer noopener\">the work<\/a> of analyst Willy Woo, who proposed the Difficulty Ribbon Compression indicator based on the \u201cDifficulty Ribbon\u201d. He later <a href=\"https:\/\/medium.com\/capriole\/hash-ribbons-bitcoin-bottoms-60da13095836\" target=\"_blank\" rel=\"noreferrer noopener\">combined<\/a> both approaches into a single concept.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">What is miner capitulation?<\/h2>\n<p>In the context of Hash Ribbons, miner capitulation is the moment when equipment servicing and electricity costs over one to two months exceed the value of the coins mined.<\/p>\n<p>Using bitcoin\u2019s hash rate, Hash Ribbons signals presumed miner capitulation. Put differently, it points to a material share of mining hardware being switched off.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Rationale behind Hash Ribbons<\/h2>\n<p>Edwards posited that bitcoin\u2019s price and mining costs are inextricably linked to hash rate. The lower the price and the higher the costs, the fewer miners remain in the network. Conversely, higher prices and lower costs attract more participation.<\/p>\n<p>Because Hash Ribbons relies on smoothed hash rate data, the indicator suits the analysis of long-term trends and identifying market entry points.<\/p>\n<p>Its lagging nature makes it ill-suited to timing exits or pinpointing favourable selling opportunities.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">How to use Hash Ribbons?<\/h2>\n<p>The Hash Ribbons chart is built from two <a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-moving-average-and-how-is-it-used-in-crypto\">simple moving averages<\/a> (SMA) of bitcoin\u2019s daily hash rate with 30- and 60-day periods. When the 30-SMA crosses below the 60-SMA, it indicates the start of miner capitulation. A cross back above is a buy signal.<\/p>\n<p>According to Edwards, in 2015 the Hash Ribbons indicator <a href=\"https:\/\/medium.com\/capriole\/hash-ribbons-bitcoin-bottoms-60da13095836\" target=\"_blank\" rel=\"noreferrer noopener\">signalled<\/a> a \u201cbad\u201d entry\u2014bitcoin\u2019s price fell by 42%. Similar patterns occurred in 2019, 2021 and 2022.<\/p>\n<p>In Edwards\u2019 view, such \u201cbad trades\u201d can be avoided by adding 50-SMA and 200-SMA for bitcoin\u2019s price. Using both tools together can help reduce risk.<\/p>\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"475\" src=\"https:\/\/forklog.com\/wp-content\/uploads\/image1-523-1024x475.png\" alt=\"\u0427\u0442\u043e \u0442\u0430\u043a\u043e\u0435 \u0438\u043d\u0434\u0438\u043a\u0430\u0442\u043e\u0440 Hash Ribbons?\" class=\"wp-image-179441\" srcset=\"https:\/\/forklog.com\/wp-content\/uploads\/image1-523-1024x475.png 1024w, https:\/\/forklog.com\/wp-content\/uploads\/image1-523-300x139.png 300w, https:\/\/forklog.com\/wp-content\/uploads\/image1-523-768x356.png 768w, https:\/\/forklog.com\/wp-content\/uploads\/image1-523-1536x712.png 1536w, https:\/\/forklog.com\/wp-content\/uploads\/image1-523.png 1834w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><figcaption>Source: TradingView.<\/figcaption><\/figure>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Risks of using the indicator<\/h2>\n<p>Popularity and a historically <a href=\"https:\/\/medium.com\/capriole\/hash-ribbons-bitcoin-bottoms-60da13095836\">positive return profile<\/a> for Hash Ribbons-based strategies do not guarantee future performance. Consider the following risks.<\/p>\n<p><strong>Hash rate<\/strong><\/p>\n<p>Hash rate is the sole input for the metric. Unlike <a href=\"https:\/\/forklog.com\/en\/news\/what-are-hashrate-and-mining-difficulty-in-cryptocurrencies\">mining difficulty<\/a>, the network\u2019s computational power is an estimate and highly volatile. Inaccurate data can lead to faulty conclusions.<\/p>\n<p><strong>Market volatility<\/strong><\/p>\n<p>According to Edwards\u2019 <a href=\"https:\/\/medium.com\/capriole\/hash-ribbons-bitcoin-bottoms-60da13095836\" target=\"_blank\" rel=\"noreferrer noopener\">statistics<\/a>, after a buy signal bitcoin\u2019s price can fall by 3% to 42%. Future drawdowns could be larger, so volatility risk must be considered.<\/p>\n<p><strong>Regulation<\/strong><\/p>\n<p>China\u2019s mining ban demonstrated that regulation affects bitcoin\u2019s hash rate. Local or global government restrictions can disrupt industry participants in specific jurisdictions, lowering network hash rate and distorting the logic embedded in Hash Ribbons.<\/p>\n<p><strong>Technological risks<\/strong><\/p>\n<p>The rollout of more efficient mining hardware, performance gains in older rigs and new cheap energy sources complicate analysis of hash rate distribution worldwide.<\/p>\n<p>New technologies can displace old ones without reducing aggregate network hash rate. Inefficient miners may exit while the cost of production falls. Miner capitulation can thus occur, yet Hash Ribbons may not detect it.<\/p>\n<\/div>\n<div class=\"wp-block-text-wrappers-cards single_card\">\n<h2 class=\"card_label\">Further reading<\/h2>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-the-mvrv-indicator\">What is the MVRV indicator?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-a-moving-average-and-how-is-it-used-in-crypto\">What is a moving average and how is it used for cryptocurrencies?<\/a> <\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-dollar-cost-averaging\">What is dollar-cost averaging?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/what-is-the-stock-to-flow-model-and-why-is-it-criticised\">What is the Stock-to-Flow model and why is it criticised?<\/a><\/p>\n<p><a href=\"https:\/\/forklog.com\/en\/news\/where-to-track-cryptocurrency-prices\">Where to track cryptocurrency prices?<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What is Hash Ribbons? Who created the indicator, and how is it used to identify bitcoin\u2019s major price bottoms? ForkLog\u2019s explainer breaks it down.<\/p>\n","protected":false},"author":1,"featured_media":37655,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"A quick guide to Hash Ribbons, the miner-capitulation indicator for spotting bitcoin bottoms.","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[2113],"tags":[2118,1137,1268],"class_list":["post-37654","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptorium","tag-101-trading-and-investing","tag-cryptocurrency-mining","tag-on-chain-analysis"],"aioseo_notices":[],"amp_enabled":true,"views":"148","promo_type":"1","layout_type":"1","short_excerpt":"A quick guide to Hash Ribbons, the miner-capitulation indicator for spotting bitcoin bottoms.","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37654","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=37654"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37654\/revisions"}],"predecessor-version":[{"id":37656,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/37654\/revisions\/37656"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/37655"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=37654"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=37654"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=37654"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}