An “elegant” Bitcoin (BTC) metric that predicted its run to $12,000 in August has flashed bullish again for the first time since July.
As noted by creator Charles Edwards on Dec. 3, the Hash Ribbons indicator is now signaling for buyers to enter the Bitcoin market.
Hash ribbons post rare “blue dot”
Uploading an annotated chart to social media, Edwards, who is also the founder of digital asset manager Capriole, noted similarities between Bitcoin now and before the previous bullish upticks throughout this year.
“Look what I found. A blue dot,” he commented, identifying the new entry point.
Hash ribbons are based on Bitcoin’s network hash rate behavior and designed to tell investors when price is due to experience upside.
In theory, when miners capitulate due to events such as a major price correction, hash rate declines, only to revive thanks to Bitcoin’s automated difficulty readjustments. Hash ribbons demonstrate that around midway through this miner capitulation is an optimal time to take positions.
As the saying goes, “Price follows hash rate” in Bitcoin, hash ribbons lend technical proof to the popular mantra.
Edwards’ “blue dot” occurs when the 30-day hash rate value crosses the 60-day value, indicating a recovery is underway.
“Hash Ribbon is setting up for a buy signal soon,” Rafael Schultze-Kraft, chief technical officer of on-chain analytics resource Glassnode, continued with a further chart.
“When hash rate recovers (30d MA crosses above 60d MA) and BTC price momentum is positive, Hash Ribbon has given excellent entry points.”
Schultze-Kraft described hash ribbons as “elegant” for the indicator’s reliability. In July, the time of the previous “blue dot” event, Bitcoin took a matter of weeks to post highs not seen in over a year.
Bitcoin coils up below $20,000
The signal comes as Bitcoin continues to range below $20,000, having seen considerable volatility while getting rejected at just above all-time highs.
Major selling pressure remains, while conversely, successfully overcoming resistance would give Bitcoin a clean sweep to the likely next level of resistance at $22,000, exchange orderbook data shows.
At press time, BTC/USD circled $19,300, having been unable thus far to retake $19,500.