One of the Best Crypto Market Indicators: Hash Ribbons

The Hash Ribbon indicator gives a buy signal during a miner capitulation when the bitcoin hash rate starts to recover.

Although financial forecasts have high fallibility, many still try to anticipate the peaks and troughs when making investment decisions. Traders turn to a variety of indicators and techniques in an attempt to spot the bottom in price as it may herald favorable opportunities.

In this article, we’ll look at one such indicator — Hash Ribbons — that has historically proven reliable in spotting strategic entry points in bitcoin.

What Is the Hash Ribbons Indicator?

The Hash Ribbons indicator is a truly unique tool for technical analysis that’s made of two specific metrics — 30 and 60-day simple moving averages (SMA) of bitcoin’s hash rate.

The hash rate is a fundamental parameter of the health of the bitcoin network that provides a clear idea of how much computing effort is required for processing transactions at any given time. Typically, a higher hash rate is considered better for network stability and security.

Developed by Charles Edwards and dubbed as “the most powerful signal to buy bitcoin ever,” Hash Ribbons is interpreted as follows:

The intersection of the 30-day SMA of the hash rate with the 60-day SMA signals the end of a miner capitulation and the beginning of a bullish trend. This is a good time to buy.

To reduce the possibility of the price falling to no more than 15% below a buy signal, Edwards recommended adding two more moving averages of the bitcoin price — the 10 and 20-day SMAs.

However, for illustration purposes, it’s enough if we’ll take a look at the behavior of only 30 and 60-day SMAs.

How Does the Hash Ribbons Indicator Work?

The Hash Ribbon indicator gives a buy signal during a miner capitulation when the bitcoin hash rate starts to recover.

Miner capitulations happen when the mining profitability falls, and miners are forced to sell their assets to keep the business going.

The following chart, which considers a timeframe from 2016 to 2020, shows two instances when the 30-day SMA has crossed the 60-day SMA:

Historical analysis of similar instances confirms that a long bullish trend often follows a buy signal.

For example, the chart below shows four buy signals since 2016:

How to Enable Hash Ribbons on the TradingView Platform

To enable the Hash Ribbons indicator on the TradingView platform, follow these simple steps:

1. Click on a specific chart, then go to the "Indicators" tab located at the top of the screen above the chart.
2. Type the word Hash and select the Hash Ribbons indicator from the list.
3. Click on the X button on the top right of the “Indicators” tab once you’ve chosen Hash Ribbons and any other indicators you want.
4. Now, Hash Ribbons have been loaded onto your layout at the bottom of the screen.
5. If you want to remove Hash Ribbons, click on the light grey square with the X next to the title of the indicator.

Unfortunately, you won’t find Hash Ribbons on Bitsgap, but we’re working on adding the indicator in the future. In the meantime, you can use dozens of other popular indicators and technical analysis tools to make your trading more confident. For example, try our latest update, Technicals Summary (or Technicals), which displays combined buy/sell signals from 27 indicators and oscillators in one intuitive interface.