The no.1 indicator for the next leg up in Bitcoin: Hash Ribbons indicator
The objective of this article is to provide a quick TL;DR on the Hash Ribbons indicator
For a more extensive overview you can read the articles by Charles Edwards the original author and creator of the Hash Ribbons indicator (you can find them here and here).
What is it?
It’s a combination of two dynamics: 1) Bitcoin miner capitulation and 2) a combination of moving averages to signal if the market is trending upwards.
Why is it significant?
The “Buy” signal has been triggered 12 times in the past 10 years and the 13th just triggered 2 weeks ago.
The max drawdown after the “Buy” signal is triggered has been -15%, the average drawdown is -9% and the average drawdown in a bull market is approximately -5%.
Looking at the current situation the “Buy” signal was triggered on December 4th when BTC was trading around $19.300. Previous data would imply that there’s a low probability for BTC going below $16.400. The drop to $17.600 on December 11th is exactly in line with the average drawdown of the past signals: -9%.
What can you do with it?
Although the dataset is not very large (12 data points in 10 years), it definitely has proven its value. The past years I’ve personally used the “Buy” signal to take high time frame trades and positions with the reassurance that the probability of BTC declining more than 15% versus the moment the signal is triggered is low. In these volatile markets these were very welcome data points and helped me achieve good results.
Want to stay up to date with the indicator yourself? You can add it via indicators in TradingView, search for “Hash Ribbons”, the one by Charles is at the top of the list.
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