A rare bullish bitcoin signal, the difficulty band compression, has started to rise for the first time since the bull run began.
As suggested by a BTC analyst Twitter, the tape compression difficulty appears to be increasing for the first time since the Bull Run began.
The indicator is a measure of the moving averages of Bitcoin mining difficulty. The mining difficulty metric can be calculated by estimating the number of hashes to mine a block.
To properly quantify these values, the BTC difficulty band compression uses a normalized standard deviation. Higher values have historically been associated with rising prices, while lower values indicate a downward trend.
Here’s what the chart looks like for the BTC difficulty band compression over the past decade:
The graph above shows some interesting features of the indicator. It appears that the difficulty of ribbon compression is historically related to price.
It looks like BTC will hit a low on the curve when the value of the indicator falls very low. And when it goes up, as is the case right now, the price goes up too.
However, there is something to consider here. The indicator is a measure of the difficulty of mining, and right now the global hash rate is facing some special circumstances due to the raids in China.
After a massive drop for a while, the global bitcoin hash rate has risen again as miners migrate from China to other countries like the United States. This should mean that the difficult would quickly go up as the usual mining farms resume operations.
Such an increase in difficulty could look like the diagram just shows.
Bitcoin price is around $ 32,000 at the time of writing, down 4% over the past 7 days. In the past month, the coin has lost almost 17% in value.
The price of BTC continues to be range-bound as the cryptocurrency is stuck in the $ 30,000 to $ 35,000 range. It is unclear when the coin could escape these levels and in which direction it could go next.
If you can orient yourself by the difficulty of ribbon compression, the price of Bitcoin could go up soon. On the other hand, due to the special mining conditions, this increase in the value of the indicator could not be reflected directly on the price this time.
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