On-chain data shows the Bitcoin puell multiple has started to leave the “buy” zone, a sign that the crypto may be heading towards bullish momentum.
Bitcoin Puell Multiple has seen a rise in value during recent days
In a CryptoQuant article, an analyst noted that the BTC puell multiple has broken out of its historic buy zone.
The “puell multiple” is an indicator that measures the ratio between the daily miner revenues (in USD) and the 365-day moving average of the same.
What this metric’s value tells is how much Bitcoin miners are currently making compared to the average for the past year.
If the indicator’s value rises, this means that miner revenue is rising right now. This leads to miners becoming more likely to sell and the price may be called “overvalued.”
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Conversely, decreasing metrics can signify that the price is being undervalued due to lower mining revenues.
Here’s a chart showing the Bitcoin price trend over several years.
Recently, the value of the metric appears to have seen some increase | Source: CryptoQuant
As you can see in the above graph, the Bitcoin puell multiple was in the “buy” zone until just a little while ago.
This zone has historically been an indicator that the cryptocurrency’s value is low. These are the locations where bear bottom formations took place.
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There is also an opposite area, the “sell” zone, which represents values of the multiple greater than 4. This area is where BTC is valued at an overvalued level.
The puell multiple recently saw some improvement and is now in the red zone. This has been an indicator that crypto was moving towards bullish momentum in the past.
One thing should be noted, however, that in the past a breakout from the region doesn’t mean a rally would necessarily begin immediately. A proper run could take a while longer due to the buildup.
At the time of writing, Bitcoin’s price floats around $21.9k, down 1% in the last seven days. The crypto’s value has increased by 3% over the last month.
The chart below shows how the currency’s price has changed over the course of five days.
The crypto market has seen a decline in value over the last days. Source: BTCUSD at TradingView| Source: BTCUSD on TradingView
Bitcoin has dropped below $22k in the last 24 hours after being above that level for approximately a week.
Featured Image from Kanchanara, Unsplash.com. Charts by TradingView.com. CryptoQuant.com.