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Puell Multiple

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Last updated 3 months ago

Puell Multiple is a metric that compares the daily Bitcoin revenue earned by miners to the average daily revenue over the past year.

Simply put:

  • If the Puell Multiple is high → Miners are earning more than usual, so they might sell more.

  • If it’s low → Miners' revenue has decreased, which could mean less selling pressure.

This indicator helps assess whether Bitcoin's price is approaching a peak or a bottom.

What is the Puell Multiple?

The Puell Multiple is a metric that compares the daily revenue earned by Bitcoin miners to the average daily revenue over the past 365 days. This indicator helps analyze miners' income trends and assess whether Bitcoin's price is approaching a peak or a bottom.

Puell Multiple Formula:

Where:

  • Daily Issued Bitcoin Value (USD): The number of Bitcoins mined daily × Daily Bitcoin price.

  • 365-Day Moving Average of Daily Issued Bitcoin Value (USD): The average USD value of issued Bitcoins over the past 365 days.

How to Interpret It?

  • High Puell Multiple (e.g., 4 and above): Miners are earning significantly more than usual. Historically, such levels have been associated with Bitcoin price peaks, as miners may sell more.

  • Low Puell Multiple (e.g., 0.5 and below): Miners' revenue has dropped well below the average. This is often linked to market bottoms and reduced selling pressure.

The Puell Multiple has been used in the past to identify major Bitcoin price tops and bottoms.

Understanding Trends

Increasing Puell Multiple (Uptrend):

  • Bitcoin price is rising compared to miners' costs.

  • The market is heating up and may be approaching a potential peak.

Decreasing Puell Multiple (Downtrend):

  • Bitcoin price is falling compared to miners' costs.

  • The market is cooling down and may be approaching a price bottom.

Understanding Market Cycles with Puell Multiple

High Puell Multiple (Caution! Possible Market Peak)

  • Meaning: Bitcoin may be overvalued.

  • Result: Miners may sell at higher prices, which could lead to a price drop.

Low Puell Multiple (Buying Opportunity!)

  • Meaning: Bitcoin may be undervalued.

  • Result: Miners are selling at relatively lower prices, which could indicate a potential market bottom.

Halving and Its Relationship with Puell Multiple

Before Halving:

  • Bitcoin supply decreases, leading to a price increase trend.

  • Puell Multiple generally rises.

After Halving:

  • Miners’ revenue model changes.

  • The market begins to adapt to the new conditions.

Measuring Miner Sentiment

  • Puell Multiple indicates when miners are more likely to sell.

  • Sudden changes may signal potential major price movements in Bitcoin.

Summary:

Puell Multiple is an important tool for understanding Bitcoin price cycles. However, it should not be used alone but rather in combination with other indicators. It serves as a valuable guide for investors looking to analyze the Bitcoin market more effectively.