Bitcoin $104,049.2 For investors, understanding market cycles is critical to identifying buying opportunities and detecting potential price peaks. One of the indicators that has been used for a long time in this context is Puell Multiple. Created by David Puell, this metric examines Bitcoin’s valuation through miner revenues, indicating whether Bitcoin is undervalued or overvalued compared to historical norms.
What is Puell Multiple?
Puell Multiple is an indicator that compares the daily income of Bitcoin miners with its long-term average. Miners must sell some of their BTC rewards to cover operational costs such as energy and hardware. Therefore, miner revenues are a critical factor affecting Bitcoin’s price dynamics.
This metric is calculated by dividing Bitcoin’s daily issuance value by its 365-day moving average. This calculation identifies periods when miner profits are exceptionally high or low by comparing current miner revenues to their annual average. These periods can mark market tops or bottoms.
The Puell Multiple chart uses colored regions to facilitate interpretation. The red zone (above 3.4) indicates that miner revenues are well above normal, while the green zone (below 0.5) indicates that revenues are exceptionally low. The neutral zone indicates that the Bitcoin price is in a stable range relative to historical norms.
What Does Current Data Say?
According to the current Puell Multiple chart provided by Bitcoin Magazine Pro, the rate is in an uptrend but has not yet entered the red phase. This suggests that Bitcoin is not in an overheated phase, with prices not near historical highs. At the same time, the rate is well above the green zone, indicating that the market is not at its bottom.
The current Puell Multiple value indicates that Bitcoin is in the mid-market cycle. While the steady increase in the rate indicates that the market is slowly moving into a bull trend, there are no signs of overheating yet. Puell Multiple offers a unique perspective on market cycles by focusing on the supply side of Bitcoin. For long-term investors, this tool can be valuable in identifying buying opportunities, spotting market tops, and managing market cycles more strategically.
By using tools like Puell Multiple, Bitcoin investors can better understand the current state of the market and make future movements more predictable. In this way, they can make investment decisions more consciously and minimize their risks.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that cryptocurrencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
