According to on-chain data, the Bitcoin Puell Multiple is currently testing the downtrend line. Will the metric break through it?
In the last few days, Bitcoin Puell Multiple has gone up a bit
An analyst pointed out in CryptoQuant that a potential trend reversal in BTC markets could be imminent, as he stated in a CryptoQuant blog post.
The “Puell Multiple” is an indicator that measures the ratio between the current daily Bitcoin mining revenues (in USD) and the 365-day moving average of the same.
The metric measures how much BTC miners earn now in comparison to what they earned over the previous year.
Miners who have a multiple greater than 1 are making more money per day, compared to what the median has earned in the previous 365 days.
Conversely, low values suggest that miners face pressure because their income is lower than last year’s average.
The indicator’s 0.5-mark has historically been below which the crypto formed cyclical tops.
Below is a chart depicting the Bitcoin Puell Multiple’s trend over time:
CryptoQuant: The value of the Metric seems to be slightly increasing in recent months| Source: CryptoQuant
You can see that Bitcoin Puell Multiple sank down some months ago and moved into the historical buy area.
Since then, the indicator has been on a gradual upwards trajectory, and is now retesting the “downtrend” line.
Since around one year ago, this downtrend line has provided resistance to the indicator. You can see in the chart that the quant marked the previous downtrends.
The Bitcoin Puell Multiple seems to have found rejection repeatedly from a downtrend line during both 2018-19 bears and 2020 COVID crashes.
Following these bottoms, the metric broke the line. The price of crypto followed a bullish trend.
The analyst notes that this is now the third time that the Puell Multiple is retesting this level during the current bear, so it’s possible it might break through it this time.
The historical trend suggests that the break of the line may signal a bearish turn for Bitcoin.
At the time of writing, Bitcoin’s price floats around $20.1k, down 3% in the last week.
Source: BTCUSD on TradingView| Source: BTCUSD on TradingView
Featured image by Maxim Hopman, Charts from TradingView.com, CryptoQuant.com