Cryptocurrency

Bitcoin (BTC) Difficulty Strip Compression Metric Gives Historical Signal! What’s Coming?

Bitcoin (BTC) difficulty strip compression indicator, an indicator that uses the difficulty strip indicator to measure market capitulation, seems to have just begun to “pump”, which historically means that the price of BTC is about to rise. As YouTuber The Moon points out, the indicator started pumping for the first time during this bull cycle, as it remained in the mid-0.01 to 0.05 range, which represents buying time.

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https://twitter. com/TheMoonCarl/status/1415941007175266304

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Is the indicator pointing bullish for Bitcoin?

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Historically, the indicator rising above these prices indicated a valuable BTC price increase. The three most notable dips below these prices occurred in January 2013, August 2015 and April 2019, predating some worthwhile bull runs. While there have been a few short periods where the indicator has risen above 0.05, it is currently well above 0.1. The rise of the indicator comes as BTC continues to trade sideways in the middle of $35,000 to $30,000, according to CryptoCompare.

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The Bitcoin difficulty stripe on which the stripe compression indicator is based creates a band of moving averages of Bitcoin’s mining difficulty based on the estimated hash number for mining a block. It basically takes into account the impact of mining on the BTC price.

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According to on-chain analyst Willy Woo, at the end of bear cycles, “the weakest miners sell more coins to stay operational. ” When this becomes unsustainable, they surrender and leave their positions; hash rate and network difficulty decrease. And this leads to ribbon compression. The lane compression indicator uses a normalized standard deviation to measure the costs of the difficulty lane.

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Bitcoin

Can the test be deceptive?

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But the number can be deceiving. Another precious indicator, the Puell Multiple, has recently given a buy signal. However, the creator of the indicator warned that it could be a deceptive signal to investors as it is based on the issuance of BTC and the cryptocurrency’s hash rate has been heavily influenced by China’s crackdown on cryptocurrency mining last month. Bitcoin’s hash rate plummeted after officials from China’s Sichuan province ordered a state power grid to power down 26 cryptocurrency mining farms in the region. Antpool, BTC. Major cryptocurrency mining pools, including .com and Poolin, were affected by this event.

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The move comes shortly after the Xinjiang government directed power plants in the Zhundong Economic-Technological Development Zone to shut down mining facilities earlier this month. Cryptocoin. com, both Xinjiang and Sichuan have historically been major Bitcoin mining centers in China due to their abundant fossil fuels and hydroelectric power.

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