bitcoin is holding firm at press time, finding support around the $56,300 to $57,000 zone, as per performance on the daily chart. Technically, sellers have the upper hand from an effort versus outcome perspective.
For the short-term trend to change, prices must recover the losses of September 1. At the same time, the bullish momentum must be accompanied by an increase in trading volume.
Currently, bitcoin might be holding steady. However, the accompanying trade-off, if we look at the September 2nd bar, is slight.
What is needed is a sharp increase in trading volume to calm fears and reassure optimistic traders that buyers are back on the scene.
bitcoin expands, Puell multiple ratio in neutral zone
As bitcoin tries to find its footing, one analyst, bitcoin-in-a-Neutral-Zone-Insights-from-the-Puell-Multiple-Index” target=”_blank” rel=”noopener nofollow”>quoting On-chain data believes it is too early to celebrate. Today’s expansion did not quickly push up the Puell Multiple plotted by CryptoQuant.
The reading is at 0.65 and lies within the range of 0.6 and 0.8. In this zone, bitcoin remains neutral. Therefore, the Puell multiple reading needs to quickly expand above 0.8 or fall to the 0.6 zone for traders to explore opportunities.
The Puell multiple compares the value of btc issued daily to its annual average. Considering that issuance changes over the months, this reading fluctuates. Over the past few months, and following the April 20 halving event, the Puell multiple has been in a narrow range between 0.6 and 0.8.
Pointing to the historical formation, aggregated over the past decade, the analyst said that whenever the Puell Multiple index falls below 0.6, it tends to offer low-risk, high-reward buying opportunities that could particularly benefit those using Dollar Cost Averaging (DCA) strategies.
On the contrary, if the ratio exceeds 0.8, it means that market sentiment is bullish and prices could soar further. In most cases, the analyst added, whenever the ratio exceeds 0.8, prices tend to rise and record new all-time highs.
Is bitcoin generating bullish momentum?
Observing Puell's multiple relation btc/chart/network-indicator/puell-multiple?window=DAY&sma=0&ema=0&priceScale=log&metricScale=log&chartStyle=line” target=”_blank” rel=”noopener nofollow”>trend In the face of price action, it is easy to spot their near-perfect timing.
For example, when prices fell to a low of $49,000 on August 5, the Puell Multiple Index, which is a lagging indicator, plummeted to 0.549. Prices then rose, pushing the index higher.
It is worth noting the recovery from the 0.60 area. If this is any guide, it could also mean that the coin, although bearish, is gaining momentum at the moment.
Featured image from Pexels, chart from TradingView
