Overview:
- The Bitcoin price indicator Puell Multiple has triggered a buy signal for the fifth time in the history of the coin
- Inventor and namesake David Puell, meanwhile, warns against too hasty conclusions
- According to Puell, factors such as a falling hash rate and the actions of the Chinese authorities against miners weigh
For the fifth time in Bitcoin history, the price indicator Puell Multiple beats out. According to on-chain analyst and creator, as well as namesake David Puell, the indicator has issued its fifth buy signal. However, Puell cautions against too fast euphoria, as the Puell Multiple is mainly based on data from the mining business and the currently falling hash rate and the pounding of Chinese mining companies are important factors.
$ BTC: Getting reports that the most awesomely-named indicator just gave its fifth buy signal in BTC history.
Looking good, yes, but remember that Puell Multiple reacts to hash rate movements too, and hash rate follows price, not the other way around.
– David Puell (@kenoshaking) June 28, 2021
According to this, the indicator reacts to the movements of hash rates and these in turn follow the Bitcoin price and not the other way around, as Puell explains in a tweet. The Puell Multiple clearly has the economy around the popular Ur-Coin and here in particular the Bitcoin miners and their earnings.
Overview: What is the Puell Multiple?
The Puell Multiple is a price indicator that determines buy signals for the Bitcoin market based on a pre-defined data situation and equation. The indicator was developed by David Puell, who as an on-chain analyst
The indicator takes a closer look at the Bitcoin miners and their earnings. Miners are often forced to sell part of their BTC earnings to cover costs due to the high cost of hardware and energy consumption. Therefore, in the on-chain analysis world, mine are often called forced sellers. Accordingly, the revenues and resulting sales that do not correspond to the market trend can influence the market over time.
Looking at the mathematical approach of the indicator, you can see that it is calculated by dividing the daily Bitcoin emission value in US dollars by the year-round moving average of daily emission values.
So, the indicator created by David Puell can provide important clues for strategic investors about when to buy Bitcoin and when not to. For this purpose, the indicator outputs buy signals. In the previous Bitcoin history, this happened only five times.
The chart above highlights the historically extremely low value of Bitcoins issued daily (Puell multipliers come in the green box), which resulted in huge returns for Bitcoin investors buying bitcoins here. It also shows a period of extremely high daily performance value (Puell Multiple comes in the red box), which has provided favorable profit-taking for Bitcoin investors trading short here.
Uptrend or downward spiral? Bitcoin exchange bath of feelings
At the beginning of the current week, the euphoria of investors increased that after the corrections, bullish times are now ushered in again. After the Bitcoin price stood at over $ 35,500 for a brief moment, many saw the uptrend coming. The buy signal now issued by the Puell Multiple should contribute to the euphoria.
However, analysts warn of the hope of an uptrend. Bitcoin was unable to hold the $ 35,000 mark at the close of the day to secure a resistance level. This circumstance is a sign that investors may close their positions in the outbreaks towards resistance, thereby provoking a downtrend.
Meanwhile, the BTC price stands at just under $ 35,000 as current data from crypto chart provider CoinMarketCap shows.
Conclusion: where the Bitcoin journey is going will be revealed
The developments in the crypto market and especially in Bitcoin show once again how volatile the market is. Whether the buy signal of the Puell indicator is right will become clear in the course of the coming weeks. Investors, meanwhile, are hoping for a new uptrend, while analysts agree that the ride is going downhill for the time being.
The fact is that the Chinese government’s current crackdown on crypto miners is affecting the market. The removal of this dominant power in the mining market creates opportunities for mining companies outside Asia. Investors who like to provide their portfolio with many investment opportunities should keep an eye on the development of one or another Bitcoin share.
