While weekend U.S. storms disrupt Bitcoin As rising costs impact profitability and cause companies to cut computing power, or computing power, cryptocurrency traders will be watching an indicator called “hash banding,” which is based on the premise that the prices of the largest cryptocurrencies tend to reach lows during periods of so-called “miner capitulation.”
In the past, periods of strength in Bitcoin have been preceded by periods when miners were forced to slow down or shut down their machines once conditions stabilized. This is reflected in the hashrate band, a metric on Glassnode that tracks the 30-day and 60-day moving average of hashrate.
A capitulation signal is given when the short-term average moves below the long-term average (shown in light red). Once the 30-day indicator crosses back above the 60-day indicator (shown in dark red), the worst phase is considered over. Historically, when this recovery coincides with a shift in price momentum from negative to positive, marked by the shift from dark red to white, it has coincided with a long-term buying opportunity.
Hashrate, the total computing power that secures the Bitcoin blockchain, has been measured to have dropped by about 20%, from about 1.2 zettahash per second (ZH/s) to about 950 exahashes per second (EH/s). This means that the next difficulty adjustment used to maintain consistent 10-minute block times is expected to drop by approximately 17%, which would mark the largest difficulty drop since China banned Bitcoin mining in July 2021.
The last time the hash band showed capitulation was in late November, when Bitcoin formed lows around $80,000. Now it’s about $88,000.
A similar pattern emerged in mid-2024. After the hash band capitulated and the Japanese yen carry trade unwound, Bitcoin bottomed near $49,000 in August before rebounding to $100,000 the following January.
During the 2022 cryptocurrency exchange FTX crash, Bitcoin bottomed near $15,000 as miners capitulated. Once the hash ribbon normalized, the price rebounded to around $22,000.
The key question now is whether this pattern will repeat itself and Bitcoin will enter a new expansion phase when hashrate and hash rate bands begin to normalize.
