A couple of caveats before exploring the potentially positive signals being thrown off by bitcoin miners. First, August is historically the worst month in terms of bitcoin performance. The largest digital currency has only notched three positive monthly showings in this month over its lifetime.
Second, there’s no getting around the fact that crypto-linked equities are sensitive to macroeconomic happenings. For example, the CoinShares Valkyrie Bitcoin Miners ETF (WGMI) slipped last Friday, following a disappointing July jobs report and amid the specter of more trade tariffs.
Irrefutable facts to be sure, but they might not be death knells for bitcoin and ETFs such as WGMI. Bitcoin miners, including those held by WGMI, are throwing off signals that could be harbingers of more upside to come for the dominant cryptocurrency.
Bullish Signs Abound From Bitcoin Miners
Though the industry is young, bitcoin miners have developed a reputation for being somewhat predictive regarding the asset’s price action. Acknowledging that, elevated hashrates can be viewed through a positive lens.
“The exponential rise in hashrate throughout the cycle has led to growing competition, tightening margins even further. During times of low volatility and stagnant price action, miners sometimes temporarily scale down operations to preserve profitability,” reported Matt Crosby for Bitcoin Magazine.
The publication also highlighted the Bitcoin Hash Ribbons Indicator, a gauge that monitors the 30- and 60-day moving hashrate moving averages. It’s akin to golden/death crosses with stocks. When the 30-day average moves below its longer counterpart, that’s usually a bearish sign for bitcoin, but when the opposite occurs, bitcoin prices have historically risen. Bitcoin bulls can take heart in knowing that Hash Ribbons Indicator was recently subject to a bullish cross.
Specific to WGMI and shares of bitcoin miners, historical precedent, even against the backdrop of last week’s retrenchment is worth noting because mining stocks often peaked and commenced declines prior to bitcoin itself, but that’s been the recent state of play.
“Historical analysis confirms that in past bull markets, mining stocks would peak before major price tops, giving a potential early warning for cycle euphoria. Right now, those stocks are accelerating again, a potential signal that traders are pricing in further upside,” according to Bitcoin Magazine.
For more news, information, and strategy, visit the CoinShares Crypto ETF Hub.
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