Traders are watching the hash ribbon as extreme weather, rising costs and falling hashrate again test bitcoin’s resilience.
Miners slash hashrate as weekend storm hits operations
Over the weekend, a powerful U.S. storm disrupted Bitcoin mining, sending operating costs sharply higher and forcing some miners to power down hardware. As companies cut computing power, or hashrate, network capacity fell and profitability came under pressure. Moreover, crypto traders quickly shifted attention to an on-chain indicator that has historically mapped out major lows in the market.
The hashrate, which reflects the total computational power securing the Bitcoin blockchain, has dropped roughly 20%. It declined from around 1.2 zettahash per second (ZH/s) to approximately 950 exahashes per second (EH/s). That said, such sharp contractions have previously coincided with a process known as miner capitulation, where unprofitable operations temporarily shut down.
How the hash ribbon indicator tracks miner capitulation
The Hash Ribbon is a market indicator built on the premise that the price of the largest cryptocurrency often forms a low during phases of miner stress. It tracks the 30-day and 60-day moving averages of hashrate, with data widely followed on platforms such as Glassnode. However, rather than focusing on price alone, it uses mining activity as a proxy for industry health.
Capitulation is signaled when the short-term average falls below the long-term average, which charting services highlight in light red. The worst phase is considered over once the 30-day moving average crosses back above the 60-day line, represented by darker red. Historically, when this recovery aligns with a shift in price momentum from negative to positive, often shown as a transition from dark red to white, it has coincided with long-term buying opportunities.
Analysts note that the current configuration of the hash ribbon resembles earlier periods when aggressive miner shutdowns later gave way to a sustained rebound. Nevertheless, the timing of any potential recovery remains uncertain, as both energy markets and macro conditions continue to evolve.
Difficulty adjustment and historical price reactions
The hashrate slump is also feeding directly into the network’s core parameters. Because Bitcoin targets consistent 10-minute block times, the protocol triggers a difficulty adjustment roughly every two weeks. With computing power down by about 20%, the next recalibration is projected to decline by about 17%. If confirmed, this would mark the largest difficulty drop since July 2021, when China banned bitcoin mining and forced widespread relocation of hardware.
The Hash Ribbon last showed a clear capitulation in late November, when bitcoin carved out a low around $80,000. Since then, the market has recovered to roughly $88,000, with intraday pricing recently quoted near $88,326.08. Moreover, market participants emphasize that while spot prices remain volatile, past cycles suggest that normalization of mining metrics has often coincided with a more durable floor.
Past capitulation cycles and post-shock rebounds
Previous macro shocks offer a useful roadmap. In mid 2024, a comparable pattern appeared when the Hash Ribbon entered capitulation around the same time that the yen carry trade began to unwind. During that phase, bitcoin bottomed near $49,000 in August before rallying to about $100,000 the following January. However, each cycle has unfolded against a different macro backdrop, making direct comparisons imperfect.
During the collapse of crypto exchange FTX in 2022, bitcoin again sank amid intense miner stress. The price fell toward $15,000 as capitulation spread across the mining sector. Once the Hash Ribbon normalized and mining economics improved, the market staged a recovery, with bitcoin rebounding to around $22,000. Moreover, this episode reinforced the indicator’s reputation as a useful gauge of cyclical extremes.
Will the current capitulation phase set up the next rally?
With the hashrate still depressed and difficulty poised for a historically large downward adjustment, traders are asking whether the latest bout of miner capitulation will again precede a broader bitcoin price recovery. The key question is whether hashrate will rebound decisively once energy costs ease and margins stabilize, allowing the Hash Ribbon to flip from stress to expansion.
If the pattern seen during the 2022 FTX crisis and the mid-2024 unwind repeats, normalization in network metrics could mark the beginning of a renewed expansionary phase for bitcoin. That said, macro conditions, regulatory developments and capital flows will all influence whether this latest capitulation ultimately sets the foundation for another long-term uptrend.
For now, the market is balancing short-term volatility against an on-chain backdrop that, historically, has pointed to opportunity once miners have weathered the most painful stage of the downturn.
