The sell-off of Bitcoin mines fears that Puell Multiple is approaching the “red zone” that was last seen at the peak of 2017


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Bitcoin (BTC) miners are selling less and less BTC, but if a metric is correct they could soon cause a major price correction.

In an update on March 11th, Philip Swift, developer of the on-chain data resource LookIntoBitcoin, identified well-known warning signs from the Puell Multiple.

Developed by David Puell, the Puell Multiple tracks when miners are likely to sell en masse to make a profit from participating in the Bitcoin network.

It divides the value of “new” BTC issued per day by the one year moving average issue, both in US dollars, to give an insight into where it would be most profitable to sell to miners.

A look at the historical performance of the multiplier shows that highs – when its value enters an upper red zone on the chart – coincide with Bitcoin price spikes and subsequent sell-offs.

The danger is clear to Swift as the multiple is now closer to the red zone than it has ever been since late 2017.

“The Puell Multiple, which deals with today’s miner RPM versus historical norms, is approaching the overbought red ribbon,” he summarized in comments on the historical chart:

“Historically, when the Puell Multiple (red line) breaks into the top red band, it coincides with large macro highs for BTC price as miners begin to realize their profits.”

Bitcoin Puell Multiple vs. BTC / USD chart. Source: LookIntoBitcoin

In 2021, the graph faces a new phenomenon that only began in late 2017 – institutional investments in Bitcoin. This year has been marked by large institutional buy-ins, and as Swift notes, the question now arises of whether miners can still push the market down despite their appetite for HODLing.

Analyst Cole Garner responded with data from on-chain analytics service Glassnode, which also showed Bitcoin price corrections after major outflows from the Poolin mining pool earlier this year.

“That graphic would argue that they did a pretty good job bringing the price down OR they are smart money and knew exactly when to sell,” he commented.

Poolin Miner Flow Chart (annotated) vs. BTC / USD. Source: Cole Garner / Twitter

The outflows remain bullishly low

Still, the general desire to sell among miners remains negligible compared to previous years.

In its latest weekly report, the Crypto Index Fund Tracker Stack Funds highlighted the fact that mining pool outflows averaged seven days, their lowest level since 2016.

That year, outflows broke below long-term support levels, which in turn preceded the bull run to $ 20,000 over the next two years.

“This happened twice in the past year alone, in May 2020 and in late January of this year,” wrote Stack.

“The double hiatus is further confirmation that miners outflows are likely to remain low, which could be a catalyst for higher prices.”

Bitcoin Miner flows 7-day average chart (annotated) against BTC / USD Source: Stack Funds

With the expectation of a further uptrend, the researchers also believed that the potential floor should return anyway. As Cointelegraph reported, that’s likely at worst $ 46,000, with that level representing Bitcoin’s strongest support since it topped $ 11,000 last year.

“Overall, most of the fundamental indicators are suggesting that miners are starting to pile up again and we expect $ 50,000 to be strong support for Bitcoin in the near future,” the report concluded.