Bitcoin Has The Same Structure As 2012 Bull Market, Strong Miners Usher The Price Action: Analyst
- When network difficulty climbing rate reduces, strong miners sell less Bitcoin, leading to less sell pressure and more room for BTC price action
- The best time to buy Bitcoin is when ribbon compresses
- Ribbon compression happens at the end of bear cycles & during halving events
- 2019 is similar to 2012 bull market
On-chain analyst, Willy Woo who is popular for his signaling models and providing investment-related tools, is now working on another tool, “Bitcoin Difficulty Ribbon.”
This model is based on the observation made by Civic CEO, Vinny Lingham who first spotted this dynamic in 2014 to determine how Bitcoin finds its price equilibrium.
Now, with 5 more years of data to back it up, the Difficulty Ribbon has come into the picture that demonstrates the impact of miner selling pressure on the price of Bitcoin. The ribbon consists of moving averages of Bitcoin difficulty so that the rate of change of difficulty can be seen easily.
The Best Time to Buy Bitcoin is when Ribbon Compresses
Per the official deduction made by Woo, when network difficulty reduces its climb rate, miners go out of business. As new coins are mined into existence, miners sell some of their mined Bitcoins to pay for production costs which produced bearish price pressure.
The weakest miners, Woo explains sell more of their BTC to remain operational. But when it becomes unsustainable, they capitulate and hashing power and network difficulty reduces that results in ribbon compression. When the ribbon flips negative or compresses, those are the “best time to buy in and get exposure to Bitcoin.”
This situation leaves only the strong miners in the market who sell less of their BTC, leaving more room for more bullish price action.
This Happens at the End of Bear Cycles & during Halving Events
Typically, Woo says this can be seen at the end of bear cycles after miners have capitulated. The lack of miner selling pressure allows for the price to first stabilize and then climb, the classic case of accumulation bottom.
But bear markets are not the only time when this happens, miners capitulate during block reward halving events as well.
During that time, suddenly half the coins are being mined for the same costs and the market has yet to catch up to pay for it. Woo points out how, after each halving, ribbon compresses as “miners die off.”
2019 is Similar to 2012 Bull Market
Woo also points out how the 2019 and the 2012 bull market shares the same structure. Both the time, we saw severe mining capitulation — ribbon flipped negative — leading to a shorter accumulation band before the price breakouts. This bull market, he says resembles 2012 more than 2016 structurally.
A quick look at the Bitcoin price chart shows that Bitcoin price register an astronomical ascent of more than 52,000% in about two years, going from $2.22 in October 2011 to $1,163 in November 2013.
However, past performance is not indicative of future results and we are already seeing the percentage of return on Bitcoin dropping in each cycle.
Bitcoin’s price is $56,930.15 BTC/USD exchange rate today. The real-time BTC market cap of $1.06 Trillion currently ranks #1 with a chart dominance at 62.37%, daily trading volume of $28.96 Billion and live coin value change of BTC 4.62 in the last 24 hours.