Ninjastic
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Board Speculation
Re: Wall Observer BTC/USD - Bitcoin price movement tracking & discussion
by
kingcolex
on 01/08/2019, 22:53:00 UTC
Quote from: El duderino_ on August 01, 2019, 10:45:14 PM
Quote from: kingcolex on August 01, 2019, 10:26:13 PM
Quote from: El duderino_ on August 01, 2019, 10:05:37 PM
Introducing the Bitcoin Difficulty Ribbon. When the ribbon compresses, or flips negative, these are the best time to buy in and get exposure to Bitcoin. The ribbon consists of simple moving averages on mining difficulty so we can easily see the rate of change in difficulty.

via Imgflip Meme Generator

https://twitter.com/woonomic/status/1156968533462413313?s=21

I wonder if difficulty will ever start to just somewhat settle especially with node size getting harder and harder to shrink.

This indicator speaks to the impact of mining on Bitcoin's price. As new coins are mined into existence, miners sell some of their mined coins to pay for production costs. This produces bearish price pressure.
https://twitter.com/woonomic/status/1156968538742988800?s=21

The weakest miners sell more of their coins to remain operational. When it becomes unsustainable, they capitulate, hashing power and network difficulty reduces (ribbon compression), leaving only the strong, who sell less leaving more room for more bullish price action.
https://twitter.com/woonomic/status/1156968540940800000?s=21

Typically we see this at the end of bear cycles, after miners capitulate, the lack of miner selling pressure allows the price to stabilise and then climb; the classic accumulation bottom.

via Imgflip Meme Generator
https://twitter.com/woonomic/status/1156968561404866560?s=21

Credit goes to @VinnyLingham who was the first AFAIK to spot this dynamic in his April 2014 article on how Bitcoin finds its price equilibrium. We now have 5 more years of data to back it up.
https://twitter.com/woonomic/status/1156968565037137920?s=21

Miners capitulate in bears, but also during block reward halvening events when suddenly only half the coins are mined for the same costs and the market price has yet to catch up to pay for it. See the compression after each halvening (marked as vertical lines) as miners die off.

via Imgflip Meme Generator
https://twitter.com/woonomic/status/1156968583571730432?s=21

As a final note, notice how the 2019 the 2012 bull market have the same structure, we saw severe mining capitulation (ribbon flipped negative) leading to a shorter accumulation band before price breakout. This bull market has resembles 2012 more than 2016 structurally.
via Imgflip Meme Generator

https://twitter.com/woonomic/status/1156968606749474816?s=21

So partially during shitty market times, they all bitch out too, but  I think we are getting close to having it where it's going to get hard to really improve largely on miners year after year like we have seen and unless the miners are willing to scale infrastructure they will slow down as well.