Bitcoin Puell Multiple Indicates Potential Top for BTC Price
According to on-chain data, the Bitcoin Puell Multiple has recently reached levels that have historically preceded local tops in the cryptocurrency’s price. The Puell Multiple is an indicator that measures the ratio between daily Bitcoin miner revenue and its 365-day moving average.
This measurement only includes block rewards received by miners for solving blocks on the network, excluding transaction fees. Block rewards are directly related to the cryptocurrency’s price, as their BTC value remains fixed. However, their USD value fluctuates with the spot price.
In contrast, transaction fees do not have the same relationship as their value depends on blockchain traffic conditions. Higher fees are only incentivized during periods of congestion in the mempool.
The Puell Multiple compares miners’ block reward revenue to its yearly average, providing insights into whether the cryptocurrency is currently overvalued. Historical analysis reveals that major bull run tops have occurred when the Puell Multiple has been high, indicating overpricing. Conversely, major bottoms have coincided with values below 1, suggesting undervaluation.
An interesting pattern highlighted by analysts is that Bitcoin has often reached local tops when the Puell Multiple reaches similar levels to its current position. If this pattern continues, it suggests that Bitcoin may have already hit its top for now.
BTC Price
At present, Bitcoin is trading at approximately $42,800, experiencing a 3% decline in the past week.
Source: Twitter
Hot Take: Bitcoin’s Potential Top Implies Market Correction
The recent touch of historical resistance by the Bitcoin Puell Multiple indicates a potential top for the cryptocurrency’s price. This metric, which compares miners’ block reward revenue to its yearly average, has historically signaled overvaluation. Additionally, the correlation between Bitcoin hitting local tops and the Puell Multiple reaching similar values adds weight to this analysis.
If this pattern holds true, it suggests that Bitcoin may have already reached its peak for the time being. With a decline in price over the past week, it appears that a market correction may be on the horizon. Traders and investors should closely monitor these developments to make informed decisions about their Bitcoin holdings.
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