The covetedBitcoin bottom requires more than just analyzing its price. The miner data is one of the most reliable indicators of market bottoms. One of the most resilient players in the crypto ecosystem, miners only capitulate when Bitcoin becomes too expensive to mine.
Hash ribbons are a unique metric used to determine whether the market is currently in its bear or bull phase. The indicator contains the 30 day and 60 day simple moving average SMA ofBitcoin's hash rate. The 30 day SMA dropping below the 60 day one shows the beginning of a bear market and shows miners have begun to capitulate.
Data shows that the market has been in miner capitulation mode for almost 60 days in a row. Once the 30 day SMA crosses above the 60 day SMA, the worse of miner capitulation will be over. The difference between moving averages sitting still for days on end makes it hard to determine when we could see a trend reversal.
Using miner balances, it shows that the worst has passed, and miners have begun to recover. Miner balances look at the total supply held in addresses that belong to miners to determine whether they have been selling off their assets. According to Glassnode, miner balances recovered from the lows they reached in June and are the highest since October 2017 in red Alongside balances recovery, showing that more miners have been withdrawing their BTC from exchanges than they were depositing them to sell on the market, according to data from Glassnode.
The difficulty adjustment shows thatBitcoin could have reached its lowest point. The difficulty adjustment went up for the first time since June, rising by 1.7%, as the current estimated number of hashes required to mine a block. The difficulty with mining ofBitcoin could have bottomed at the beginning of August, according to the increase. If Bitcoin can keep its price close to $23,000 resistance, we might not revisit these mining difficulty lows any time soon.
Another reliable indicator of market bottoms seems to be red. The Puell Multiple is an indicator that is used to determine mining probability by calculating the ratio of daily coin issuance in USD and the 365 day moving average daily coin issuance value. When the Puell Multiple is low, it shows that miner profitability is low compared to the yearly average. When the indicator is high, miner profitability is high, and it incentivizes miners to liquidate their treasuries.
The Puell Multiple has marked previous cycle bottoms with a good degree of accuracy — it has flashed bottom signals in November 2011, January 2015, November 2018, and May 2020. Data shows that the Puell Multiple has left the green zone for the first time since June and is climbing slowly and steadily. The outlook remains positive, despite the fact that the indicator has gone in and out of the green zone in previous market cycles.