Top Quant uses the Puell multiple to suggest a pattern that explains why the current Bitcoin bull cycle is only in the first phase.
The bull market is not over yet, phase 1 has only just begun
According to a CryptoQuant analyst, past cycles show that the current Bitcoin bull market is not over yet. The Puell multiple seems to indicate where the price could go next.
The Puell Multiple is a BTC indicator used to tell how healthy the miners’ earnings are. It is calculated by dividing the mining earnings by the 365 day moving average (MA) of the same.
Puell Multiple = Mining Revenue USD ÷ 365 MA (Mining Revenue USD)
With the help of the metric it becomes possible to say how much sales pressure miners are exposed to. When the indicator is high, the miners’ earnings are relatively healthy, so the miners are not forced to sell. While low values could indicate they are facing significant selling pressure.
With miners holding large amounts of Bitcoin, significant selling pressure among them could affect the price of the cryptocurrency to a visible extent.
Well, this is how the Puell multiple changed during the bull cycles 2011 and 2013:
The Puell Multiple vs the Bitcoin price during 2011 and 2013
The graphic above numbers the different stages of these runs, and the colored zones help identify the pattern of where the prize goes next after it hits each one.
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Price hits the yellow box during a mid-cycle high. The end of the cycle is indicated when the value touches the red area.
A new cycle will not begin until the top post has halved in the middle of the cycle. The following graphic shows what the 2017 bull run looked like and what the current one might look like:
The current Bitcoin bull run has just begun
Examination of this diagram makes it clear that the 2017 cycle also followed a similar pattern for the multiple-chart price vs. Puell.
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Based on this pattern, it looks like the current bull run is only in the first phase. If a similar trend continues, BTC should next make a big uptrend when the coin hits a new ATH.
At the time of writing, the price of BTC is hovering around $ 47.8,000, down 1.5% over the past 7 days. In the past month the coin has accumulated 15% in profits.
Here is a chart of Bitcoin’s performance over the past three months:
BTC continues on an overall downtrend | Source: BTCUSD on TradingView
Featured image from Unsplash.com, charts from CryptoQuant, TradingView.com