Puell Multiple drops as miner revenues hit 10-month low

Miner revenues serve as a barometer for the overall state of the Bitcoin ecosystem, reflecting the delicate balance between mining costs, Bitcoin price, and network difficulty. Since Apr. 24, miner revenue has consistently been below its 365-day simple moving average (SMA), with only two brief exceptions in early June. This prolonged period of below-average revenue […]

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Six on-chain metrics suggesting Bitcoin is a 'generational buying opportunity'

Six tried and tested on-chain metrics are repeating patterns last seen at the bottom of the past three bear markets.

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Top 5 Watershed Moments In BTC On-Chain Analysis’ History. Is Your Favorite In?

These five moments shaped Bitcoin On-Chain analysis. Down below you’ll find a basic 101 article that reviews the basic concepts of the trade. If you have any problem with the list, David Puell is to blame. He’s a full-time on-chain analyst and the creator of MVRV and Puell Multiple. He didn’t include the metrics he created on the list, which says a lot. Related Reading | Lessons From Reason’s “The Fake Environmentalist Attack on Bitcoin” Mini-Doc In the following article, there’s also something for on-chain analysis experts. A side game called: Did your favorite moment make it?  1. ByteCoin invents cointime destroyed in 2011, the very first on-chain metric ever, still used today, and first metric to detect holding behavior in any financial asset. — David Puell (@kenoshaking) February 17, 2022 Anyway, let’s get into it. On-Chain Analysis Moment #1- ByteCoin Invents Coin Days Destroyed (CDD) AKA Coin Time Destroyed Invented In 2011, according to Puell, CDD is “the very first on-chain metric ever, still used today, and first metric to detect holding behavior in any financial asset.” How does the metric detect holders, though? According to Glassnode Academy, “Coin Days Destroyed is a measure of economic activity which gives more weight to coins which haven’t been spent for a long time.” So, the first eureka moment was to get the coin’s age into the equation. That way, the all-important holders also entered. Glassnode again: “It is considered an important alternative to looking at total transaction volumes, which may not accurately represent economic activity if value was not stored for a meaningful time. Conversely, coins held in cold storage as a long term store of value are considered economically important when they are spent as it signals a notable change in long-term holder behaviour.” BTC price chart for 02/17/2022 on Gemini | Source: BTC/USD on TradingView.com 2. Moment #2 – Willy Woo and Chris Burniske Invent NVT Ratio  This one emerged in 2017, and, according to Puell, it’s “where on-chain begins its Golden Age and became clearly an ecosystem of specialists”. It’s also “the first application of traditional economic/financial concepts to Bitcoin”. But, what’s the NVT Ratio specifically? Glassnode Academy responds: “Network Value to Transactions (NVT) Ratio describes the relationship between market cap and transfer volume. Per Willy Woo, its creator, NVT can be considered analogous to the PE (price to earnings) Ratio used in equity markets.” Another way to look at it is, “NVT is that it is the inverse of monetary velocity, comparing two of Bitcoin’s primary value propositions”. Those are store of value Vs. settlement/payments network. 3. @nic__carter and @khannib invent realized cap in 2018, the single most important and robust metric in the field, and first verifiable discovery of the cost basis of any asset. — David Puell (@kenoshaking) February 17, 2022 On-Chain Analysis Moment #3 – Nic Carter And Antoine Le Calvez Invent Realized Capitalization Created In 2018, Puell thinks Realized Capitalization is “ the single most important and robust metric in the field, and first verifiable discovery of the cost basis of any asset”. But, what is it exactly? According to Glassnode Academy, Realized Capitalization also makes on-chain analysis look into the age of the coins. “Realized capitalization (realized cap) is a variation of market capitalization that values each UTXO based on the price when it was last moved, as opposed to its current value. As such, it represents the realized value of all the coins in the network, as opposed to their market value.” Ok, “realized cap reduces the impact of lost and long dormant coins, and weights coins according to their actual presence in the economy of a given chain”. How does it do it, though? Glassnode again: “When a coin that was last moved at significantly cheaper prices is spent, it will re-value the coins to the current price, and thus increase realized cap by a corresponding amount. Similarly, if a coin is spent at a price lower than when it was last moved, it will re-value to a cheaper price and have a corresponding decrease on realized cap.” Moment #4 – Dhruv Bansal Invents HODL Waves  Created in 2018, HODL Waves is the “last major primer in on-chain analysis, first metric to segregate supply into different conceptual frameworks”. According to Purell, it’s also the “most comprehensive economic time analysis on Bitcoin to date”. Surprising no one, HODL Waves also looks at the age of the coins. According to Glassnode Academy: “HODL Waves provide a macro view of the age of coins as a proportion of total coin supply. This provides a gauge on the balance between short term and long term holdings. It can also indicate where changes in this age distribution occur as the thickness of HODL wave bands change in response to dormant coins maturing, or when old coins are spent, resetting their age into the youngest category.” 5. @ErgoBTC releases the forensics of PlusToken in 2019, the grey swan that defined the market structure of Bitcoin for that year and first relevant nation-state attack on the asset. — David Puell (@kenoshaking) February 17, 2022 On-Chain Analysis Moment #5 – Ergo Releases The Forensics Of PlusToken This famous case happened in 2019. According to Purell, it’s “the grey swan that defined the market structure of Bitcoin for that year and first relevant nation-state attack on the asset.” For a report on the situation, we had to consult Crypto Briefing, who spoke to: “Ergo, the lead researcher of the report, told Crypto Briefing in an email that the most striking feature of this scam was its size. “Billion-dollar scams are very rare,” they said. “We did not expect the previously reported 200K BTC volumes to be accurate, but they were.” Related Reading | Bitcoin On-Chain Demands Suggests That The Market Has Reached Its Bottom The Ergo team also explained why the laundry of the funds didn’t work that well. It was because they practiced “self-shuffling.” What’s that, you ask? Crypto Briefing again:  “It refers to the “repeated UTXO splitting and merging in hundreds of transactions,” according to the report. This method was both easy to track and the most common way in which PlusToken funds were handled.” This case wouldn’t be complete without a big institution’s involvement. This time, the suspect is Huobi: “Huobi played a major role in off-loading these funds too, with nearly 250,000 addresses associated with the PlusToken funds. These addresses were reduced to two clusters which were identified following the incompetent privacy standards.” Of course, those are just suppositions. When it comes to the giant Huobi, nothing’s been proven. Feature Image by analogicus on Pixabay | Charts by TradingView

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Puell Multiple: The Bitcoin Metric That Says BTC Miners Aren’t Ready To Sell

Miners determine more of bitcoin price than most investors understand. The price at which miners are willing to sell usually correlates with how much profit that they can make from selling the coins that they have mined. Depending on the price of the asset, miners usually choose to sell or hold it. This could influence the market price of bitcoin. Related Reading | Number Of Short-Term Bitcoin Holders Hits All-Time Low, How This Affects The Price Profitability is the major reason for mining. But when profitability goes down, miners either sell and cut their losses, or the other option, where they can hold on to their coins and wait for the price to get a point where profitability increases. According to the Puell Multiple, miners are currently choosing the latter. Holding their coins instead of selling for lesser profitability. Miner Profitability Drops Data shows that miner profitability has dropped in comparison to the last time that bitcoin was at this price. The profitability for bitcoin back in April at $50K had been 40% higher than it is right now when bitcoin hit $50K again. This means that miner profitability is hitting the lows at all-time highs. This drop in profitability has seen miners refusing to sell the BTC they are rewarded with for mining blocks. Instead choosing to hold these coins in wait for much higher prices. Miners are selling less compared to the previous bull market | Source: CryptoQuant The Miner Position Index (MPI) tells us the ratio of the bitcoins leaving miners’ wallets compared to the one-year moving average. This year, the Miner Position Index shows that this number has fallen to a negative 0.405. A Miner Position Index of 2 or higher means most miners are selling their coins. Below 2 means some are selling. But at a negative 0.405 number, it means almost all of the miners are choosing not to sell their coins. Bitcoin Price Staggers As Miners Refuse To Sell Bitcoin price has been on an upward trajectory for the better part of the weekend. Finally breaking the $50K price point on Monday as market sentiment rose into extreme greed. After the break, the price quickly went into a downward correction that dragged the price of BTC back down into the $47K range. A hard-won battle had been fought to get the price above this resistance point. But now it seems the whole process is to be repeated again due to the current dip in price. BTC price back up above $49,000 | Source: BTCUSD on TradingView.com Another uptrend on Wednesday has put the digital asset on a path to taking back its position over $50K. Indicators show that the bulls still have complete control of the market. Despite the dip, sentiments have not turned into the negative. Buy pressures continue to be the order of the day as both institutional and individual investors clamor for a position in the leading cryptocurrency. Related Reading | Why An 18% Drop In Bitcoin Could Still Be Bullish Despite this, miners do not find this a profitable point to sell. With price projections so high, going up to over $100,000 by the end of the year, it is no surprise that miners are choosing to hold on to their coins for better prices. Featured image from Bitcoin News, chart from CryptoQuant and TradingView.com

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Has Bitcoin Rally Already Hit Top? Here’s What Puell Multiple Says

On-chain data shows the Bitcoin Puell Multiple has hit pretty high levels recently. Here’s what this may mean for the current rally. Bitcoin Puell Multiple Has Risen To High Levels In Recent Days As pointed out by an analyst in a CryptoQuant post, the Puell Multiple is currently at even higher levels than those seen during the 2021 bull run top. The “Puell Multiple” is an indicator that measures the ratio between the daily revenue of the Bitcoin miners and the 365-day average value of the same. The mining revenue here is calculated by multiplying the spot price by the total number of coins that the miners are issuing (that is, receiving their block rewards) every day. This metric tries to judge whether the current price of the cryptocurrency is fair or not by comparing the current revenue of the miners against the yearly average. When this metric has a value above 1, it means the miners are making higher revenues than the average for the past year right now. The asset’s value may be said to be overpriced during such times as the miners gain more motive to sell the more profits they are making. Related Reading: Stablecoins Interest Spikes As Traders Look To Exit Market On the other hand, values of the indicator below 1 imply these chain validators are making less than the norm currently. The lower the indicator’s value goes, the more trouble the miners may have in supporting their operations. Thus, the coin could be assumed to be undervalued during such conditions. Now, here is a chart that shows the trend in the Bitcoin Puell Multiple over the last few years: The value of the metric seems to have been quite high in recent days | Source: CryptoQuant Historically, major bottoms in the cryptocurrency’s price have formed whenever the Puell Multiple has dipped below the 0.5 mark. Below this value, miners’ daily revenues are less than 50% of the yearly average, meaning that this cohort comes under some intense pressure inside this zone. Tops, however, haven’t been so simple; the value at which they occur seems to have been decreasing with each Bitcoin bull run. But in general, they have naturally occurred at values significantly above the 1 mark (that is, during periods when the miners are raking in large amounts of revenues). During the last couple of months, the Puell Multiple has once again been above the 1 level, and recently, it has observed a further surge towards a value of 2. This value is interestingly even higher than what was observed during the November 2021 all-time high price, but not near the levels of the first half of 2021 top. Related Reading: PEPE Outperforms Bitcoin In Social Media Buzz, Triggers Bullish Run For Frog Coin The current levels of the metric are also only slightly lesser than what the April 2019 rally, a rally that bears many similarities with the current one, saw during its top. Obviously, it’s hard to say anything about the top based on these observations alone, as tops have historically not followed any set pattern of the indicator, unlike the bottoms. However, the current values still likely imply that the price has become quite overheated recently, which may mean that even if a top isn’t in yet, it may be close nonetheless. BTC Price At the time of writing, Bitcoin is trading around $27,300, down 2% in the last week. BTC has surged during the past day | Source: BTCUSD on TradingView Featured image from iStock.com, charts from TradingView.com, CryptoQuant.com

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What is the Bitcoin Puell Multiple Indicator and How Does It Work?

The Puell Multiple is a powerful tool for Bitcoin investors, analyzing miner revenues to identify potential market tops and bottoms. Heres how to read itand what its signaling today.

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Bitcoin Is About To See A Historically-Profitable Crossover In This Metric

On-chain data shows the Bitcoin Puell Multiple is about to undergo a crossover that has historically been very bullish for BTC’s price. Bitcoin Puell Multiple Could Cross Its 365-Day MA In Near Future As pointed out by an analyst in a CryptoQuant Quicktake post, the Bitcoin Puell Multiple has been approaching its 365-day moving average (MA) recently. The “Puell Multiple” here refers to a popular on-chain indicator that tells us about how the revenue of the Bitcoin miners compares against its yearly average. BTC miners earn their income through two sources, the transaction fees and the block subsidy, but in the context of the Puell Multiple, only the latter is relevant. Block subsidy is the reward miners receive as compensation for adding blocks to the network. Related Reading: Bitcoin Hashrate Falls Off, Miners Expecting Pause In Bull Run? When the indicator’s value is greater than 1, it means the miners are currently making a higher revenue than the average for the past year. On the other hand, it being under the threshold suggests the miners are earning less than usual. Now, here is a chart that shows the trend in the Bitcoin Puell Multiple, as well as its 365-day MA, over the last few years: As displayed in the above graph, the Bitcoin Puell Multiple had plunged under the 1 mark earlier in the year, but recently, its value has seen a sharp rise back towards the mark. The reason behind the earlier plummet was the occurrence of the fourth BTC Halving. “Halvings” are events coded into the blockchain that automatically shave off the asset’s block subsidy in half every four years. As the Puell Multiple keeps track of the block subsidy, it naturally makes sense that the Halving would drastically affect the ratio’s value. Outside of the Halvings, the block subsidy remains constant in BTC value and is more or less given out at a constant rate. However, the ratio’s value can still change at times other than Halvings because it measures the USD value of the miner revenue. The rewards that miners get are in BTC and so, their value is also tied to the USD rate of the asset. With the cryptocurrency observing a sharp rally recently, the miner revenue seems to be back to the same as the 365-day MA. The 1 mark isn’t the only important level the Puell Multiple has risen to; it is now near its 365-day MA. In the chart, the quant highlighted what happened the last three times the metric broke above this line. It would appear that the asset went on to rally at least 76% each time. Related Reading: Is $135,000 Bitcoins Current Ceiling? This Model Says So It remains to be seen whether the Puell Multiple could break above this line, potentially giving a bullish signal for Bitcoin, or if the retest would fail. BTC Price Bitcoin has recently witnessed a cooldown in bullish momentum as its price has fallen to a sideways movement. At present, BTC is trading at around $91,900. Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com

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Bitcoins Puell Multiple Signals A Bullish Surge: Could A New ATH Be Near?

While Bitcoin has been unable to break past the $70,000 price mark for over 2 months now, the asset has made efforts to remain above the $60,000 mark. Amid this maintenance above the $60,000 price level, analysts have continued to speculate on BTC’s future trajectory especially when the asset would make the play out of [...]

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