September 24, 2023

On-chain data shows that the Bitcoin Pail Multiple recently hit a significantly higher level. What could this mean for the current rally?

Bitcoin Pale Multiple has surged to higher levels in recent days

As pointed out by an analyst at CryptoQuant PostThe Puell multiple is currently at an even higher level than the one seen during the 2021 bull run top. The “Puel Multiple” is an indicator that measures the ratio between the daily revenue of bitcoin miners and the 365-day average value of the same.

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Here mining revenue is calculated by multiplying the spot price by the total number of coins that miners are releasing (i.e., receiving their block rewards) every day.

This metric tries to determine whether the current price of a cryptocurrency is fair or not by comparing the current earnings of miners to the annual average.

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When this metric has a value above 1, it means that miners are earning more revenue than the previous year’s average. The value of assets can be said to be higher during such times as miners are more motivated to sell for more profits that they are earning.

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On the other hand, an indicator value below 1 means that these on-chain validators are currently making less than the norm. The lower the indicator’s value, the more trouble miners may have to support their operations. Thus, the coin may be undervalued during such situations.

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Now, here is a chart that shows the trend in bitcoin pull multiple over the years:

The value of the metric seems to have been quite high in recent days | Source: CryptoQuant

Historically, whenever the PuEL multiple has fallen below the 0.5 mark, major bottoms have formed in the cryptocurrency’s price. Below this value, daily revenue for miners is less than 50% of the annual average, meaning this group comes under some intense pressure within the sector.

However, TOP has not been so simple; The price at which they occur seems to be decreasing with each bitcoin bull run. But in general, they naturally occur at values ​​above the 1 mark (i.e., during periods when miners are generating large amounts of revenue).

During the past few months, the PuEL multiple has once again been above the 1 level, and recently, it has seen another jump towards a value of 2. This price is interestingly higher than all prices seen during November 2021 – all time high prices, but nowhere near the levels of the first half of 2021 top.

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The metric’s current level is also only slightly lower than the April 2019 rally, a rally that bears many similarities with the current one seen during its top.

Obviously, it is difficult to say anything about the top based on these observations alone, as the top has not historically followed any set pattern of the indicator, unlike the bottom. However, the current prices could still indicate that the price has been overheated recently, which could mean that even though there is no top yet, it could still take off.

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btc price

At the time of writing, bitcoin is trading around $27,300, down 2% over the past week.

bitcoin price chart

BTC has surged during the past day | Source: BTCUSD on TradingView

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