In the world of bitcoin investing, understanding market cycles is key to identifying buying opportunities and detecting potential price spikes. One indicator that has stood the test of time in this regard is the several girls. Originally created by David Puell, this metric examines bitcoin's valuation through the lens of miners' income, offering insight into whether bitcoin could be underrated either overrated compared to its historical norms.
This article will explain what the Puell Multiple is, how to interpret it, and what the current chart reading suggests to investors. To see this tool in real time, see the Puell Multiple Chart in bitcoin Magazine Pro.
What is the Puell multiple?
The Puell Multiple is an indicator that compares the daily income of bitcoin miners with their long-term average. Miners, as the “supply side” of the bitcoin economy, must sell portions of their btc rewards to cover operational costs such as energy and hardware. This makes miners' income a critical factor influencing bitcoin price dynamics.
How is the Puell multiple calculated?
The formula is simple:
Puell Multiple = btc daily issuance value (in USD) ÷ 365-day moving average of daily issuance value
By comparing miners' current earnings to their annual average, Puell Multiple identifies periods when miners' earnings are unusually high. high either lowindicating possible market highs or lows.
How to read the Puell multiple graph
The Puell Multiple chart uses color zones To facilitate interpretation:
- Red Zone (Overvaluation)
- When the Puell Multiple enters the red zone (above 3.4), suggests that mining companies' income is significantly higher than usual.
- Historically this has coincided with bitcoin price spikesindicating a possible overvaluation.
- Green Zone (Undervaluation)
- When the Puell Multiple falls into the green zone (below 0.5), indicates that miners' income is unusually low.
- These periods have historically aligned with bitcoin Market Fundsoffering excellent purchasing opportunities.
- Neutral Zone
- When the Puell Multiple oscillates between these levels, the price of bitcoin is usually in a stable range relative to historical norms.
Current Perspectives: What Does the Puell Multiple Tell Us?
looking at the current Puell Multiple chart from bitcoin Pro Magazine:
- The Puell Multiple (orange line) is upward trend but it is still well below the red zone of overvaluation.
- This suggests that bitcoin is not yet in an overheating phasewhere prices historically peak.
- At the same time, the metric is well above the green undervaluation zone, indicating that we are no longer in a bottom phase of the market.
What does this mean for investors?
The current Puell Multiple reading points to bitcoin being in a mid market cycle:
- Bullish moment: With the metric rising steadily, the market appears to be entering a bullish phase, although it is still far from being “overheated.”
- No immediate peak: The lack of a red zone reading suggests there may still be room for bullish growth before a major correction.
Investors should monitor this chart closely in the coming months, especially as bitcoin approaches its next halving event in 2028, which could further influence miners' income.
Why the Puell Multiple is important for bitcoin investors
Puell Multiple offers a unique perspective on bitcoin market cycles by focusing on the supply side (miners' income), rather than just the demand. For long-term investors, this tool can be valuable for:
- Identify purchasing opportunities: The green area highlights periods of undervaluation.
- Detect market peaks: Historically, the red zone has aligned with major price highs.
- Navigating market cycles: Combining the Puell Multiple with other indicators can help investors time their entries and exits more strategically.
Stay Ahead of the Market with bitcoin Magazine Pro
For professional investors and bitcoin enthusiasts looking to deepen their analysis, tools like the Puell Multiple chart on bitcoin Pro Magazine Provides essential information on bitcoin valuation trends.
By understanding Puell Multiple and its historical significance, you will be able to make informed decisions and better navigate bitcoin's unique market cycles.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making investment decisions.
