On-chain data shows that the bitcoin Puell Multiple indicator is retesting a crucial level that may end up deciding the fate of the latest rally.
bitcoin Puell Multiple Is Now Retesting Its 365-Day Moving Average
As explained by an analyst at CryptoQuant Quicktake bitcoin-Miner-Profitability” target=”_blank” rel=”nofollow”>mailThe interaction of the Puell Multiple with its 365-day moving average (MA) can indicate trends in the market.
The “Puell Multiple” refers to an indicator that tracks the relationship between the daily income of bitcoin miners (in USD) and their 365-day MA. Mining revenue here is simply the total amount of coins issued by the network within a 24-hour span multiplied by the coin's spot price.
When the Puell Multiple value is greater than 1, it means that miners are currently earning higher income than last year's average value. Naturally, when this happens, the selling motive will increase for these chain validators and therefore the price of btc can be considered overvalued.
On the other hand, values below the mark suggest that the price of the cryptocurrency may be undervalued, as miners are now earning income below the 365-day average.
Now, here is a chart showing the trend in the bitcoin Puell Multiple, as well as its 365-day MA, throughout the asset's history:
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/01/Bitcoin-Puell-Multiples-at-Crucial-Juncture-Will-New-Test-Salvage.png" alt="bitcoin Multiple Puell ” width=”1280″ height=”625″ loading=”lazy” data-recalc-dims=”1″/>
The two lines appear to have come together in recent days | Source: bitcoin-Miner-Profitability" target="_blank" rel="nofollow">CryptoQuant
As shown in the chart above, the bitcoin Puell Multiple had naturally spiked to high levels just before, when the asset's price had seen its rally, which had naturally resulted in miners' block rewards also skyrocketing.
However, as the asset's price has struggled recently, the indicator's value has dropped again and is now retesting its 365-day MA. This line has been historically relevant to the metric, as highlighted in the chart.
Generally, a break above the line has proven to be bullish for the cryptocurrency, while a move below may imply a transition into a bearish trend. As such, bitcoin could be at a crucial juncture right now, at least from the perspective of this indicator.
Last year, Puell Multiple also witnessed a similar retest on its 365-day MA, as evident from the chart. Back then, the metric ended up finding support at this important line, and the resulting bounce was what led to the asset's latest rally.
Now it remains to be seen if the 365-day MA would also act as support this time or if the indicator would suffer a breakout. In this latter scenario, bitcoin price could end up seeing a deeper correction.
btc Price
bitcoin's struggle has continued recently as its price has dropped to just $40,800.
<img loading="lazy" decoding="async" class="alignnone size-medium aligncenter" src="https://www.tradingview.com/x/DuJagV50/" alt="bitcoin price chart” width=”1534″ height=”868″/>
Looks like the price of the coin has slipped down recently | Source: BTCUSD on TradingView
Featured Image from iStock.com, Charts from TradingView.com, CryptoQuant.com
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