The price of bitcoin is not only determined by supply and demand on the market. Miners also influence the course. According to analyst Charles Edwards, an indicator based on mining power now shows a buy signal:
A Buy signal is forming on the Hash Ribbons indicator.
– Charles Edwards (@caprioleio) December 27, 2019
What does this indicator say?
This is great, but what does the graph actually say? Edwards developed this indicator based on the difficulty ribbon. We wrote about that not long ago.
Is the line falling? Then that means that some miners stop, the computing power on the network then decreases. You call that event miner capitulation. During a miner capitulation, the rate drops initially, after which it strongly recovers.
The last time the indicator showed a buy signal was in January 2019. A good time to buy bitcoin, because the price then rose from 3,000 euros to 12,200 euros.
But we should not cheer too early. The buy signal was seen today for the first day, and it can still go in any direction with the rate. It is therefore still unclear whether it will turn out as positively as last time. Or as they say it so nicely in the advertisements: results achieved in the past offer no guarantees for the future.
Another indicator also points to an increase
Analyst Scott Melker agrees with Edwards that the price will rise, but uses a different indicator. He relies on the Stochastic RSI. This indicator shows a rising movement, while the bitcoin rate falls. You call that divergence, and that is usually a precursor to a price rise.
According to Melker, it is important to pay attention to this divergence: “The first time this happened, bitcoin rose from $ 6,400 to $ 9,900. The second time predicted the increase from $ 3,200 to $ 14,000. The third time predicted an increase from $ 7,400 to $ 10,400. Where are we going this time? “
(2) The second preceded the pump from $ 3,200 to $ 14,000 (!!!) and the third predicted the move from $ 7,400 to $ 10,400 just weeks ago. What will the fourth one in the sequence do? pic.twitter.com/GIE4l6qt2d
– The Wolf Of All Streets (@scottmelker) December 23, 2019
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