As a seasoned crypto investor with a decade-long journey through the digital asset landscape, I can’t help but feel a sense of deja vu when observing the recent drop in the Bitcoin Puell Multiple below the 0.4 level. This phenomenon has historically signaled significant bottoms for BTC, as highlighted by the chart showing the indicator’s trend over the past decade.
The latest on-chain data indicates that the Bitcoin Puell Multiple has dropped into a historically low region, suggesting prolonged consolidation in Bitcoin’s price movement.
Bitcoin Puell Multiple Is Now Under The 0.4 Level
In a recent CryptoQuant Quicktake post, an analyst pointed out that the Bitcoin Puell Multiple has dipped below 0.4 for the first time since late 2022. The Puell Multiple is a well-known on-chain metric which calculates the ratio of daily Bitcoin miner income to the 365-day moving average (MA) of the same figure. In simpler terms, it’s comparing current miner revenue to their average revenue over a year.
As a researcher, I’d like to clarify that when I mention daily miner revenue, I’m referring to the U.S. dollar value of the Bitcoin (BTC) rewards the network validators receive for verifying and adding blocks to the blockchain. It’s essential to note that miners also acquire income from transaction fees, but in the context of the Puell Multiple, it’s solely the initial compensation, typically known as Issuance, that is significant.
If the value of this ratio exceeds 1, it means that miners’ current income from block rewards is higher than the average they earned over the past year. Conversely, if the value falls below the threshold, it indicates that these miners or chain validators are currently earning less than their usual revenue.
Now, here is a chart that shows the trend in the Bitcoin Puell Multiple over the past decade:
In the graph provided, you can see that the Bitcoin Puell Multiple reached its highest point in April this year. This significant increase primarily contributed to the strong growth observed in Bitcoin during the first three months of 2024.
From the graph, it’s clear that the indicator experienced a significant drop below the 1 mark immediately following this peak. This sudden decline can be attributed to an incident that took place at that time: the fourth Halving event.
Every four years, Bitcoin’s blockchain automatically reduces the reward for mining new blocks by half, an occurrence known as halving. This recent reduction in issuance has led to a drop, or crash, in the Puell Multiple.
Since Bitcoin’s price has gradually decreased over the past few months, the U.S. dollar value of miner revenue has similarly dropped. This decline can be seen in the Puell Multiple, which has followed suit. With its recent drop, this indicator now sits below 0.4.
Historically, when the price of Bitcoin drops below 0.4, it tends to be a significant point. As shown in the graph, the asset often experiences a low point or forms a base when the metric falls within this range.
Previously, the Puell Multiple reached this low point in 2022, which corresponded with the lowest points of the cryptocurrency’s bear market. Based on historical trends, it seems plausible that the Bitcoin price could exhibit a similar pattern in its current situation.
In other words, historically, Bitcoin’s price tends to hit its lowest point after staying in a certain range for some time. This suggests that a recovery might take a while, given this pattern persists.
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As a researcher studying cryptocurrency trends, I’ve observed Bitcoin making repeated attempts over the past day to surpass the $58,000 threshold. However, these efforts have not gained sufficient traction, culminating in today’s attempt pushing the price up to $57,600 instead.
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2024-09-13 13:16