Hash Ribbons

The Hash Ribbons indicator identifies periods of Bitcoin miner capitulation and recovery to signal high-probability long-term buying opportunities. By monitoring the Bitcoin network's hash rate and price momentum, this tool highlights market bottoms when miners switch off rigs due to unprofitability and subsequently resume operations.

Usage

The Hash Ribbons script is primarily used to identify macro-scale accumulation zones. Users can monitor the relationship between the short-term (30-day) and long-term (60-day) Moving Averages (MA) of the Bitcoin Hash Rate.

• Miner Capitulation: Triggered when the 30-day Hash Rate MA crosses below the 60-day Hash Rate MA, indicating that miners are shutting down hardware. This is represented by gray circles and a red ribbon.
• Hash Rate Recovery: As the 30-day MA begins to increase or cross back above the 60-day MA, the indicator shows green circles, signaling that the worst of the capitulation may be over.
• Buy Signal: A definitive "Buy" signal (blue circle) is generated when the Hash Rate has recovered (30-day MA > 60-day MA) and price momentum turns positive (10-day price SMA > 20-day price SMA).

Details

The concept behind Hash Ribbons was originally developed by Capriole Investments. It operates on the theory that Bitcoin price bottoms often coincide with miner capitulation. When the cost of mining exceeds the market price, less efficient miners are forced to sell their holdings and exit the network, leading to a "flush out" of sell pressure.

The script utilizes external data via the request.security function to pull daily hash rate metrics from sources like "IntoTheBlock" or "Quandl." It also includes historical Halving markers to provide context on Bitcoin’s supply-side cycles. This refactored version by LuxAlgo includes an optional "Oscillator" mode to visualize the percentage difference between the hash rate averages and is optimized for real-time alerts.

Settings

General Settings

• Plot Type: Switches the visual output between "Ribbons" (overlay style) and "Oscillator" (histogram style).
• Hash Rate Short SMA (days): Defines the period for the fast hash rate moving average (default is 30 days).
• Hash Rate Long SMA (days): Defines the period for the slow hash rate moving average (default is 60 days).
• Plot Signals: Toggles the visibility of status circles (Capitulation, Recovery, Buy).
• Plot Halvings: Toggles background highlights for historical Bitcoin Halving events.
• Plot Raw Hash Rate: Displays the unprocessed daily hash rate value on the chart.
• Source Hash Rate: Allows the selection of the data provider for hash rate metrics (IntoTheBlock or Quandl).

FAQ

How do I interpret the blue "Buy" signal? The blue circle represents the first instance where hash rate recovery is confirmed and Bitcoin's price momentum has turned positive. Historically, these signals have appeared near generational bottoms.

Why does the hash rate data look different in real-time? Hash rate data is typically reported once per day. The script uses specific logic to pull the most recent available data while maintaining historical accuracy for backtesting.

How can I access this tool? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.