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The Most Profitable Buy Signal In Bitcoin Is About To Trigger Despite Distance From ATH

Tony Spilotro by Tony Spilotro
2 years ago
in Bitcoin
0
Advertisement

Bitcoin price this week set a new all-time high price record, taking the leading cryptocurrency by market cap to right below $20,000 before a minor pullback began. And while there is always a possibility that the asset could see a stronger correction given how overheated it is and how profitable the year of 2020 has been, one indicator is pointing to significant upside from here instead.

In fact, the cryptocurrency’s most profitable buy signal ever is about to trigger. And if Bitcoin really has begun a new bull market, then anywhere between 2,000% to over 5,000% returns historically have been possible. Will this signal lead to yet another multi-thousand percent bull run? Or will miner capitulation kick into overdrive ahead of the signal confirming?

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Bitcoin Hash Ribbons Ready To Signal Buy Despite Consolidation Around All-Time High

Bitcoin was the first-ever cryptocurrency, and with it birthed an entire industry and asset class, and possibly the greatest technological revolution since the computer or the internet. It has taken years of steady development and adoption for the world to begin to understand how it works.

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Analysts face the challenges of performing technical analysis on a chart with little price history and has risen from worthless to $20,000 in the span of a decade. Low supply, high volatility, and generally low liquidity compared to other assets cause indicators and chart patterns to give false signals, or not behave as anticipated.

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Fundamental analysis is even more challenging, as there are no company profit margins to review, and the asset is primarily speculative. The crypto industry’s best analysts have developed a new set of fundamental tools that pay added attention to the significance of miners and their contributions to overall cryptocurrency economics.

bitcoin hash ribbons profitable buy signal

The hash ribbons could signal "buy" as early as this week, according to the tool's creator | Source: BTCUSD on TradingView.com

One such analyst is Charles Edwards, who has developed a tool called the Hash Ribbons that have also been referred to as the crypto asset’s most profitable buy signal. According to Edwards, that buy signal is set to return as early as this week, even with the leading cryptocurrency by market cap trading around its former all-time high.

bitcoin hash ribbons profitable buy signal

2019 and 2020 buy signals were just the appetizers before the main course | Source: BTCUSD on TradingView.com

 

Recapping The Performance Of The Cryptocurrency’s Most Profitable Signal Ever

The Hash Ribbons are essentially a pair of moving averages of the Bitcoin network Hash Rate and Mining Difficulty, that can signal when miners are “capitulating” or unable to sustain their operations profitably.

When these miners are shaken out, the theory is there is even less sell pressure on the market and only the strongest miners are left to hold until the next peak. Given where Bitcoin is in its current cycle and in relation to its all-time high, the “capitulation” could simply be some profit-taking, which is prompting the consolidation around current levels.

When the buy signal arrives saying capitulation has ended, magic happens. In the chart above showing the performance of the Hash Ribbons from Bitcoin’s 2018 bear market bottom, the results are astonishing.

The tool accurately triggered a buy signal ahead of a 289% rally, a 46% rally, a 38% rally, and the current 116% rally in the top cryptocurrency. But those are bear market results, and the final buy signal leading to the bull market is the one to really watch, and what gives the Hash Ribbons the reputation as the most profitable buy signal in the asset’s history.

bitcoin hash ribbons profitable buy signal

2019 and 2020 buy signals were just the appetizers before the main course | Source: BTCUSD on TradingView.com

The chart above shows the type of power that the buy signal is capable of on a grand scale. The final buy signal before the bull breakout in 2013, was followed with a 5800% climb.

After Bitcoin’s halving in 2016, the buy signal took the asset to $20,000 and made it a household name, with a staggering 3300% surge. Given the law of diminishing returns over time, and the fact that from the first peak to the second peak, ROI dropped by 60%, another 60% reduction in returns would still put the target for the next peak at around $400,000 or over 2000% ROI from current levels.

RELATED READING | BLOOMBERG ANALYST: BITCOIN IS “TINY” NOW, BUT “PRICE DISCOVERY STAGE” IS HERE

Taking the average timeframe between each final buy signal and the next major peak, the median is roughly a full year difference, projecting the next bull market top to be in around November 2021.

Only time will tell if the buy trigger was again valid and if the data continues to prove that the indicator is the most profitable one to watch.

Featured image from Deposit Photos, Charts from TradingView.com
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellence. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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