Bitcoin Puell Multiple Hits 14-Month High, Here’s What It Means

On-chain data shows that the 7-day moving average (MA) Bitcoin Puell Multiple has recently hit a 14-month high. Here’s what it could mean for the market.

The Bitcoin 7-day MA Puell Multiple has risen above 1 recently

As pointed out by an analyst in a CryptoQuant post, the BTC price was around $48,000 the last time the metric was at its current level. “Puell Multiple” is an indicator that measures the ratio between the daily income of the Bitcoin miners and the 365-day MA of the same (both in USD).

When the value of this metric is greater than 1, it means that the miners are earning more right now than the average for the last year. If the indicator hits very high values ​​above this mark, miners are likely to sell as they are likely to collect a significant amount of profit.

On the other hand, the multiple being below the threshold means that mining revenues are less than the norm at the moment. Low enough values ​​below this mark have historically been a sign that the cryptocurrency is undervalued.

Now, here is a chart showing the trend of the 7-day MA Bitcoin Puell Multiple over the last couple of years:

Looks like the 7-day MA value of the metric has shown some rise in recent days | Source: CryptoQuant

As shown in the graph above, the 7-day MA Bitcoin Puell Multiple had been below the 1 mark over the past year or so as the bear market gripped the asset. However, with the recent uptick in the coin’s price, the indicator appears to have seen some rapid ascent and has now broken out of the zone again.

This is the first time in about 14 months that the metric has crossed above the 1 level. To see what effect this could have on the current market, here is a chart highlighting how the indicator behaved over the past few cycles:

The trend in the indicator over the history of BTC | Source: CryptoQuant

In the graph, the quant has marked the different levels that have been relevant to the 7-day MA Bitcoin Puell Multiple during the previous cycles. It seems that sustainable rallies have usually taken place whenever the metric has made a successful break above the 1 mark.

When the indicator is below 1, some miners may have trouble running their business, as the lower income may not pay costs such as electricity bills. Therefore, in times like this, some miners may be forced to sell their reserves to keep their plants running.

However, the analyst explains that when the indicator shows an upward trend that breaks through 1, miners start to become more comfortable with keeping their bills paid, and therefore the selling pressure from this group decreases.

If the same pattern follows this time as well, the current break of the Bitcoin Puell Multiple in the region above this level could be good news for the viability of the current rally.

BTC price

At the time of writing, Bitcoin is trading around $24,500, up 13% in the past week.

Looks like BTC has moved sideways since the rise | Source: BTCUSD on TradingView

Featured image from Michael Förtsch at Unsplash.com, Charts from TradingView.com, CryptoQuant.com