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Last week, the performance of Bitcoin was close to its psychological level at $10K. However, a rumor regarding Satoshi Nakamoto selling off his Bitcoins emerged thereby bringing about its collapse to $8.7k price level.
Some market participants consider this move to be a healthy correction, while a key indicator known as the Hash Ribbons Crossover has suggested more declines for the leading cryptocurrency ahead.
Miners’ earnings per block have reduced by 50 percent since the successful block reward halving event two weeks ago. High electricity costs and older mining equipment have compelled miners working with tight margins to drop off the network. Hence, the hash rate of Bitcoin fell by more than 20 percent from its lifetime highs.
The custom indicator, known as the Hash Ribbons, monitors crossovers in two moving averages of the hash rate and it is close to revealing an upcoming decline. This is because it is currently close to crossing over to the downside and it revealed the same signal some weeks prior to Bitcoin’s crash from $6k to $3,150 at the end of the 2018 bear market.
According to analysts, whenever the custom indicator crosses over to the downside, it shows that there is miner capitulation and during the said capitulation, unprofitability sets in for some miners, thereby forcing them to sell off their Bitcoins to keep their operations online or out of debt. An analyst known as Charles Edwards noted that the recovery of the Hash Ribbons signals the best time to enter the cryptocurrency market.
The bearish forecast is supported by technical analysis. According to a renowned trader known as BigChonis on Twitter, the weekly chart of Bitcoin revealed a textbook “tweezers” top, marked by two candles with the same body length in succession. Based on this observation, Bitcoin is purportedly ready to move lower.