Puell Multiple

Bitcoin has historically profited from Puell Multiple lift-offs, but unique macro conditions mean what happens next is uncertain.

Bitcoin (BTC) is enjoying what some are calling a "bear market rally" and has gained 20% in July, but price action is still confusing analysts.

As the July monthly close approaches, the Puell Multiple has left its bottom zone, leading to hopes that the worst of the losses may be in the past.

Puell Multiple attempts to cement breakout

The Puell Multiple one of the best-known on-chain Bitcoin metrics. It measures the value of mined bitcoins on a given day compared to the value of those mined in the past 365 days.

The resulting multiple is used to determine whether a day's mined coins is particularly high or low relative to the year's average. From that, miner profitability can be inferred, along with more general conclusions about how overbought or oversold the market is.

After hitting levels which traditionally accompany macro price bottoms, the Puell Multiple is now aiming higher — something traditionally seen at the start of macro price uptrends.

"Based on historical data, the breakout from this zone was accompanied by gaining bullish momentum in the price chart," Grizzly, a contributor at on-chain analytics platform CryptoQuant, wrote in one of the firm's "Quicktake" market updates on July 25.

The Multiple is not the only signal flashing green in current conditions. As Cointelegraph reported, accumulation trends among hodlers are also suggesting that the macro bottom is already in.

"Unprecedented macroeconomic conditions"

After its surprise relief bounce in the second half of this month, Bitcoin is now near its highest levels in six weeks and far from a new macro low.

Related: Bitcoin futures data shows 'improving' mood' despite -31% GBTC premium

As sentiment exits the "fear" zone, market watchers are pointing to unique phenomena which continue to make the 2022 bear market extremely difficult to predict with any certainty.

In another of its recent "Quicktake" research pieces, CryptoQuant noted that even price trendlines are not acting as normal this time around. 

In particular, BTC/USD has crisscrossed its realized price level several times in recent weeks, something which did not occur in prior bear markets.

Realized price is the average at which the BTC supply last moved, and currently sits just below $22,000. 

"The Realized Price has signaled the market bottoms in previous cycles," CryptoQuant explained.

"More importantly, the bitcoin price did not cross the Realized Price threshold during the last two periods (134 days in 2018 and 7 days in 2020). Yet, since June 13, it crossed back and forth this level three times, which shows the uniqueness of this cycle due to unprecedented macroeconomic conditions."

Those conditions, as Cointelegraph reported, have come in the form of forty-year highs in inflation in the United States, rampant rate hikes by the Federal Reserve and most recently signals that the U.S. economy has entered a recession.

In addition to realized price, meanwhile, Bitcoin has formed an unusual relationship to its 200-week moving average (MA) this bear market.

While normally retaining it as support with brief dips below, BTC/USD managed to flip the 200-week MA to resistance for the first time in 2022. It currently sits at around $22,800, data from Cointelegraph Markets Pro and TradingView shows.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

The Puell Multiple bounces from its latest rare trip into the "buy" zone, and previously, BTC/USD has subsequently put in a macro bottom.

A classic Bitcoin (BTC) on-chain indicator has seen a “hell of a bounce” even as price action stays uncertain.

In a tweet on July 9, Philip Swift, creator of analytics resource Look Into Bitcoin, highlighted a dramatic change of course for the Puell Multiple.

Advancing Puell and hash rate "a good sign"

A deceptively simple metric, Puell tracks miner behavior with a view to understanding Bitcoin market extremes.

It has served extremely well as an indicator of when BTC price tops and bottoms are likely due, and in late June dipped into its green “buy” zone for only the fifth time in history.

Thanks in part to last weekend’s record difficulty readjustment, Swift says, Puell has now reversed upwards — and if it keeps going, higher prices should logically follow.

“Hell of a bounce out of the green zone this week for the Puell Multiple,” he summarized.

“Largely down to the difficulty adjustment and increase in hashrate. Will be a good sign if we see this and hashrate continue to climb quickly as bitcoin miners come back onboard.”

As Cointelegraph reported, miners returning to work after being displaced from China will create more competition and boost the Bitcoin hash rate, with difficulty climbing once again to account for the changes.

Estimates vary greatly as to when the turbulence impacting mining will be truly over.

A reversal for Puell meanwhile could herald a definitive macro Bitcoin price floor. As trader and analyst Rekt Capital recently observed, dips into the green zone tend to be followed soon afterwards by a BTC/USD bottom.

The trip into the green itself occurs while Bitcoin is still preparing to put the bottom in, and does not completely line up with price behavior.

Playing down Grayscale unlocking

Bitcoin price action is seeing strength as the weekend progresses, something which could nonetheless result in a reversal in line with recent short-term trends. 

Related: BTC price regains $33k as Square confirms 'mainstream' Bitcoin wallet plans

The upcoming Grayscale unlocking events remain a topic of conversation, but opinions differ as to whether BTC/USD will be affected.

"This topic is the next big narrative," trader Michaël van de Poppe said in an update on Saturday, putting it alongside topics such as Bitcoin options expiries.

He added that negative bias is already active across crypto markets, which may give undue credence to the unlocking as a threat to price stability.

Whale selling pressure is too great to preserve the bull market for now, one warning says, while similarities to 2017 provide a silver lining for hodlers.

Bitcoin (BTC) is "confirming" a bear market because whales are still sending large amounts of BTC to exchanges.

That's according to Ki Young Ju, CEO of on-chain analytics service CryptoQuant, who on June 21 warned over the "very uncertain" current state of Bitcoin. 

Too many whales spoil the market?

Uploading a chart of the so-called "Whale Capitulation Index," Ki identified the first major spate of whale selling on exchanges since July 2019. 

At that time, BTC/USD had just come off a run to $13,900 — a level it would not reach again until October 2020.

As such, given this historical context, Ki joined the voices arguing that the recent $64,500 all-time high for Bitcoin could well have been a local top.

"I hate to say this, but it seems like the $BTC bear market confirmed," he wrote in comments.

"Too many whales are sending $BTC to exchanges."

The data caught the attention of statistician Willy Woo, who this week noted that hodlers were once more adding to their positions, dredging up the supply at price levels just above $30,000.

A request for data on whales' behavior during 2017 yielded a chart showing three distinct episodes of coins being sent to exchanges en masse. This, as the Twitter user who provided it highlighted, did not stop BTC/USD hitting its then all-time high of $20,000 by the end of the year. 

Continuing, Ki himself acknowledged that it may not pay to stay bearish on Bitcoin beyond the short term.

"To be clear, I expect my $BTC bearish bias won't last long (maybe just a few weeks) because the market looks good in terms of supply/demand in the long term (e.g., Stablecoins ratio(USD) and SSR)," he added.

So don't get me wrong, I'm not saying it's over."

China sends Puell Multiple tumbling

As Cointelegraph reported, a host of factors appears to be contributing to downward price pressure on Bitcoin.

Related: Classic bearish chart pattern forms for Bitcoin as BTC price tumbles to $32K

Most notable of all is arguably the seismic shift among miners after China launched a crackdown which halted activities in some of what were previously the most intensive mining regions worldwide.

Commentators have called the event, which is already seeing hashing power transfer to other countries, as the biggest "attack" that the network has ever witnessed.

The network hash rate has declined considerably, but not by more than 40% from its all-time highs, while price action has retained $30,000 support.

CryptoQuant eyed a corresponding drop in Bitcoin's Puell Multiple, a classic indicator which now puts the largest cryptocurrency closer to "buy" territory.