Another Bitcoin golden cross has been spotted — and it could mean a bull run is in the making
- Hash ribbons essentially show market sentiments and are used by traders to predict the rise and fall of the price of
- The overall hash rate for Bitcoin has been growing of late.
- Experts have often said that the bear phase in the market wouldn’t last the way it did in 2019 this time.
Blockchain analytics platform Glassnode has reported a ‘
A ‘golden’ cross occurs when the average value of an asset in the short term crosses that of its average value over the long term. In this case, the comparison between 30 and 60-day averages of Bitcoin’s hash ribbon indicates that trading volumes are increasing substantially again.
This is the same metric that was spotted ahead of the Bitcoin rallying in January 2019, January 2020, March 2020 and December 2020.
Breaking down the jargon
The concept of hash ribbons was created by Charles Edwards, Founder of Capriole Investments, a licensed asset management firm specialising in Bitcoin.
The Bitcoin hash ribbon is a metric that’s based on the Bitcoin network’s hash rate. It basically indicates how much computing power is going into the Bitcoin Network at any given time.
Computing power is what is required to authenticate transactions. And, growing computing power is a sign that miners are having to deal with more transactions, which — in turn — is a sign of increased trading volumes.
The Hash Ribbon is a market indicator that assumes that Bitcoin tends to reach a bottom when miners capitulate, i.e. when Bitcoin becomes too expensive to mine relative to the cost of mining.
Hash ribbons tell investors when the price of Bitcoin is expected to start growing, and a golden cross is an indicator of the same. Miners earn less during
A Bitcoin bull run may be in the making
Historically speaking, a golden cross like this is usually followed by a surge in prices of Bitcoin, meaning traders can start putting in their money in anticipation of the rise.
The increase in hash rate reported by Glassnode could also be a sign that miners who were moving away from China have established a base elsewhere. Last week, five North American miners had witnessed a 58% increase in the number of Bitcoins they mined between July and June. Marathon Digital, Riot Blockchain, Bitfarm, Argo Blockchain and Hut8 generated 1802 Bitcoins in June, capitalising a market trend that had originally started mid-May.
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