On-chain data shows that Bitcoin’s puell multiple has started to leave the “buy” zone, a sign that the crypto may be heading for bullish momentum.
Bitcoin Puell Multiple has risen in value over the past few days
As one analyst pointed out in a CryptoQuant post, the BTC puell multiple is currently breaking out of the historical buy zone.
The “puell multiple” is an indicator that measures the relationship between daily mining income (in USD) and the 365-day moving average of same.
What the value of this metric tells you is how much Bitcoin miners are currently earning compared to last year’s average.
When the value of the indicator increases, it means that the income of the miners is increasing at the moment. This leads to miners being more likely to sell and the price can be called “overpriced”.
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On the other hand, decreasing values of the metric may suggest that the price is becoming more undervalued as miner revenues are falling.
Now, here is a chart showing the trend in Bitcoin’s puell multiple over the past few years:
The metric value appears to have seen an increase recently | Source: CryptoQuant
As you can see from the chart above, Bitcoin’s puell multiple was in the “buy” zone until recently.
Historically, this zone with indicator values below 0.5 has been a sign that the price of the cryptocurrency is currently undervalued. Bearish bottom formations have occurred here.
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There is also an opposite area, the “sell” zone, which represents values of the multiple greater than 4. Naturally, BTC is overvalued in this region.
Very recently, the puell multiple has seen an increase and has now just come out of the green zone. In the past, this has usually been a sign that the crypto is now headed for bullish momentum.
However, one thing should be noted: in the past, a breakout of the region did not mean that a rally would necessarily start immediately. There could still be a few more months of buildup before a proper run can begin.
At the time of writing, the Bitcoin price is hovering around $21,900, down 1% over the past seven days. Over the past month, the crypto has gained 3% in value.
The chart below shows the trend in the price of the coin for the past five days.
It seems that the value of crypto has plunged for the last few days | Source: BTCUSD on TradingView
After hovering above $22k for about a week, Bitcoin appears to have dipped below the level in the last 24 hours.
Kanchanara Featured Image on Unsplash.com, TradingView.com Charts, CryptoQuant.com
This post Bitcoin Puell Multiple Takeoffs From Buy Zone, Will Bullish Momentum Continue?
was published first on https://www.newsbtc.com/news/bitcoin/bitcoin-puell-multiple-lifts-off-buy-zone-bull/