A fundamental Bitcoin signal, the Puell Multiple, suggests that it might be a great time to buy more based on past patterns.
Puell Multiple Shows Bullish Signal?
As pointed out by crypto analyst Lex Moskovski on Twitter, the puell multiple is down into the green zone again.
The puell multiple is defined as the daily value of the issued coin divided by the 365 day moving average of the same.
Puell Multiple = Daily Issued Coin Value in USD ÷ Daily Issued Coin Value in USD (365 days moving average)
Below is a chart showing the trend of the puell multiple:
The Bitcoin Puell Multiple trend over the years | Source: Glassnode
The circles highlight the points where the Puell Multiple dipped into the green zone. As is visible from the graph, this is usually followed by a rise in the price of BTC.
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This makes the green zone a favorable period to buy the cryptocurrency. And right now, it seems like the multiple is again down to this area of the chart.
What Does The Green Puell Multiple Mean For Bitcoin’s Price?
If the historical pattern is anything to go by, the green puell multiple might indicate that a bullish pattern is to follow soon.
However, something to note is that miners also affect the multiple’s value. Since China’s ban has disrupted miners around the country, it’s possible the green signal is because of that.
The number of daily issued coins depends on how many Bitcoins miners supply to the ecosystem. As most of the world’s mining hash rate resides in China, the recent crackdowns in hubs like Sichuan would surely have an effect.
Nonetheless, it’s yet to become clear whether this could be a false indicator. It’s entirely possible that the mining crackdowns have only aggravated the dip, and that it was going down there soon either way.
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If it’s indeed the latter, the price of BTC might be going up soon, and a bullish pattern might be taking hold.
Right now, Bitcoin‘s up 10% in the last 7 days as its price floats around $36k. Here is a chart noting the trend over the last few months:
BTC seems to gain an upwards trend as it breaks $35k | Source: BTCUSD on TradingView
It’s unclear at the moment whether Bitcoin is in a bullish or bearish market. A green puell multiple implies that the coin is undervalued, which would mean a bullish trend might be coming.
However, as the source of this might be related to the dropped mining hash rate due to China’s mining crackdowns, it’s possible the puella multiple indicator won’t affect the price by much.