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Wishbone is dropped by Bonemass and required to find silver veins in the Mountains. It blinks and emits a sound cue when you are near a hidden secret. The closer you get to the location, the faster it will blink. Then, you just have to unearth the secret with a pickaxe.
Wishbone is also a positive condition in Valheim that is granted when you equip a wishbone. The wishbone condition is what actually triggers the blinking effect and the wishbone is completely useless when not equipped.