Recently, we saw Bitcoin’s hash ribbon trigger.
This signals some sort of distress among miners. The cost of mining went too high. Some miners shut down. Short- and long-term measures of hashrate inverted, causing the ribbons to flash.
For a long time, this was a bullish signal. When miners went through periods of distress, they sold, tamping down on Bitcoin’s price. Once they finish selling, the market would rise again. Hash ribbons gave us a quick way to tell when the winds shifted.
Not so fast
As you an see from the movements of Bitcoin’s price in the chart above, the hash ribbons haven’t worked this year.
Why?
Probably because miners fund themselves differently now.
Many have lending arrangements. The public ones can sell equity or debt instruments to raise cash.
You can see this in the Miners Position Index. It's a crude measure of how much miners are selling now compared to a historical benchmark. It's fairly low, suggesting they’re not shipping off more Bitcoins than usual.
Many of them don't need to. They can post their inventory as collateral for a loan.
Also, private brokers like OTC desks are more sophisticated and better-sourced than before, with deep connections to the miners and deal-making structures that help miners smooth everything out.
If you include hash ribbons in your analysis, take this into account. Too much has changed since they were created.
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