Bitcoin has historically profited from the Puell Multiple spikes. But unique macro conditions mean what happens next is uncertain.
Historically accurate Bitcoin metric exits buy zone in bear market
Bitcoin (BTC) is enjoying what has been described as a “bear market rally”. In this process, it gained 20% in July. But price action still confuses analysts. As the July close approaches, the Puell Multiple is breaking out of the bottom, giving rise to hopes that the worst of the losses may be in the past.
Puell made multiple attempts to amplify the explosion.
Puell Multiple is one of the best known on-chain Bitcoin metrics. It measures the value of Bitcoins mined on a given day compared to the value of those mined in the last 365 days. The resulting multiplier is used to determine whether a day’s mining is particularly high or low relative to the year’s average. From this, miner profitability is derived from the more general results of how much the market is overbought.
After hitting the levels that traditionally accompany macro price dips, the Puell Multiple is now aiming higher. Grizzly, a contributor to on-chain analytics platform CryptoQuant, noted in his analysis of July 25:
Based on historical data, the exit from this region was accompanied by bullish momentum on the price chart.
The Puell Multiple is not the only signal flashing green under current conditions. The accumulation trends among long-term investors also show that the macro bottom is already inside.
“Unprecedented macroeconomic conditions”
As we covered in the analysis of Kriptokoin.com, the crypto market took a surprising leap in the second half of this month. On the other hand, Bitcoin is now close to its six-week highs. But a new macro low is a long way off. As sentiment exits the “fear” zone, market watchers point to unique phenomena that continue to make the 2022 bear market extremely difficult to predict with precision. In their recent analysis, CryptoQuant stated that even price trend lines are not behaving normally this time.
Notably, the price of Bitcoin has exceeded the realized price level several times in the past weeks. This was unprecedented in previous bear markets. Realized price is the average price at which the BTC supply last moved. It currently sits just under $22,000. According to CryptoQuant’s analysis:
Realized price has signaled market bottoms in previous cycles. More importantly, the Bitcoin price has not crossed the realized price threshold in the last two periods (134 days in 2018 and 7 days in 2020). Still, it has crossed this level back and forth three times since June 13, which shows the price. The uniqueness of this cycle due to unprecedented macroeconomic conditions.
Meanwhile, in addition to the realized price, Bitcoin has had an unusual correlation with the 200-week MA average in this bear market. BTC/USD normally uses the 200 MA as support with short dips. But the 200-week MA acted as resistance for the first time in 2022. The 200 MA is currently around $22,800, according to TradingView data.
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