Miners are Capitulating

Headshot

Cole Garner

• Categories:

Hash ribbons is on the brink of inversion. That’s news you never want to hear. Inversion signals a downturn in hashrate. It’s a leading indicator of miner capitulation. Bitcoin (BTC) is dangling on the edge of a cliff.

 

bitcoin miner capitulation

 

What is miner capitulation?

Small miners get backed into a corner when BTC price is low & the generation of mining hardware they use becomes obsolete. Inversion’s likeliest outcome: cash-desperate miners sell BTC gradually…then all at once.

 

 

It’s a vicious cycle: Undercapitalized miners panic sell, price dumps, longs get squeezed, stop losses cascade — then more miners lose their lunch.

 

 
Where does it end? With strong hands. If BTC breaks down, I’ll look to the macro range’s volume point of control for  support. 

 

 

 

 

But inversion hasn’t happened yet — if we’re lucky, hashrate recovers before capitulation starts to snowball. It’s not looking good though — we’ve *never* been so close to inversion for so long without going over the edge.

 

 

 

There’s a much larger context to this. I spelled it all out a month ago — highly recommended reading.

 

 

 

 

Miner capitulation can be anticipated with hash ribbons, which tracks the 30 & 60 day SMA of hashrate. It’s a strong indicator of trend, and the trend is almost always up. A hash ribbons inversion (MA crossover) confirms that the trend is down.

 

 

 

Inversion is super rare — it’s only happened twice in the last four years. The first time was a few weeks after the halvening, in 2016. The inversion kicked off an immediate 30% drop.

 

 

 

The second inversion was just over a year ago — two weeks before price broke the $6k bear market bottom.

 

 

 

There are a few implications:

First – if this snowballs, it’s a generational buying opportunity. I expect it to be the last time we *ever* see prices that low.

If your friends or family have expressed interest in buying BTC— they need to know there’s not much time left.

 

 

 

Second: if bitcoin capitulates, the shitcoin index shits the bed. 95% of alts will dump.

There’s nothing to do yet. But if we get inversion — I’d consider starting to take profit on alts.

 

 

 

Third: After the drop has bottomed, I expect a long triangular consolidation process to follow, leading into the halvening.

 

 

 

Post-halvening is the *gravitational* short. Imagine your revenue cut in half — overnight, forever. I don’t care how long ago you priced it in — naked swimmers are gonna meet the tide. Inversion has followed both halvenings, 2-3 weeks after the event, like clockwork.

 

 

 

And after that, what happens next? More consolidation — then full blown bull market!

Resources:

Hash Ribbons Indicator

To learn more about hash ribbons & miner capitulation, read this solid piece by Charles Edwards, the creator of hash ribbons.

*Follow the author of this article, Cole Garner, on twitter.