Indicator Overview

The Hashrate Drawdown indicator measures the percentage decline of the Bitcoin network hashrate from its previous all-time high (ATH). By smoothing the raw hashrate data, the indicator filters out daily statistical noise to reveal the true structural health of the network. It serves as a vital proxy for miner conviction and operational stress, as significant drawdowns often coincide with miner capitulation events; periods where less efficient miners are forced to turn off their machines due to falling prices or rising difficulty.

How To Use

The Hashrate Drawdown is primarily used to identify periods of network stress and potential market bottoms driven by miner behaviour.

• Near-Zero Readings (Bright Green): When the indicator is at or near 0%, the network is operating at peak security and miners are expanding their hardware capacity. This reflects high confidence and network growth.

• Moderate Drawdowns (Darker Green): Initial dips in hashrate (e.g., -5% to -10%) suggest minor operational adjustments or short-term shifts in mining profitability. These are common during local price consolidations.

• Deep Drawdowns (Deepest Green/Contraction): Significant percentage drops (e.g. > -15%) signal a major contraction in mining activity. Historically, these capitulation periods often align with the final stages of a bear market or the recovery phase following a halving, frequently marking macro price bottoms.

• Recovery toward ATH: When the drawdown begins to narrow and move back toward zero, it confirms that miners are re-entering the network or upgrading equipment, signaling that the period of maximum operational stress has passed.