Puell Multiple blinks the bullish signal for Bitcoin


Bitcoin dropped from $ 10,200 in mid-February to a 12-month low of below $ 4,000 last week, leaving many hoping for a strong move before halving occurred in May 2020.


However, the key indicator Puell Multiple has dropped to the level that shows the value of newly released Bitcoin daily is quite low compared to historical standards.


Put simply, these signals indicate that cryptocurrencies are currently undervalued.


Puell Multiple is calculated by dividing daily Bitcoin issuance value in US dollars by MA 365 days of daily issue value.


The daily issue value refers to the new coins added by the miner to the ecosystem, in exchange for receiving coins as a reward for validating blocks on the blockchain. Miners usually cover mining costs by selling coins to the market.


bitcoin


Puell Multiple (12/2019 - 3/2020) | Source: Glassnode


Puell Multiple dropped to 0.41 on March 16, which is the lowest level since January 17, 2019 and was last seen at 0.47 according to data from blockchain monitoring company Glassnode.


The data is currently hovering in the green zone or in the range of 0.3 to 0.5 and each marked the bottom of the bear market in the past.


Historical data also shows that the indicator enters the green zone at the end of the bear market when the downtrend weakens.


Market the bear year 2018


The Bitcoin bear market from a record high of $ 20,000 reached in December 2017 ended at a low of nearly $ 3,200 occurring in mid-December 2018, with Puell Multiple hitting a low of 0.3.


bitcoin


Puell Multiple (Tamphitheater bear year 2018) | Source: Glassnode


The indicator went into the green zone in the last leg of the bear market, starting on November 14, 2018, when the price fell below the long-term support level of $ 6,000 and trading at $ 4,000 on the day. 11/20.


On that day, the Puell Multiple fell below 0.5, signaling undervaluation. The selling pressure eased in the following days, allowing a recovery from $ 3,400 to $ 4,400 in the last week of November.


Although the price rebounded only for a short time, the seller was not able to cause much damage, as evidenced by a price just below $ 200 below the March low of $ 3,400 on March. 12/15. At this time, Puell Multiple is 0.3.



Puell Multiple (2011-2015) | Source: Glassnode


About half a decade ago, Bitcoin's decline from its November 2013 high of $ 1,100 ended almost $ 150 in January 2015. Puell Multiple also bottomed out near 0.3 in mid-January. Similarly, the previous bear market ended in November 2011 with the index falling to 0.3.


The bear market is about to end?


Thus, if history rhymes, the index below 0.5 indicates the worst is coming. Other metrics such as market value versus real value (MVRV) Z-score also show that BTC is undervalued.


However, cryptocurrencies may not be out of danger yet, as the Puell Multiple has not yet dropped to 0.3 - the bottom of the bear market in the past.


If nothing changes, we will see another sell-off, pushing the price back to the range of $ 5,000 - $ 4,000 and the Puell Multiple to 0.3.


"Csurely price will Retest recent lows once or twice”, CEO Mike Alfred of Digital Assets Data said.


At the same time, he added that a drop below $ 5,000 would be short-lived, due to strong demand from long-term holders - investors bought Bitcoin before the price hike from $ 6,000 to 20,000. dollars in the fourth quarter of 2017 and in the last 5 weeks of 2018.


Bitcoin is currently trading near $ 6,022, up sharply from recent lows below $ 4,000, but also falling significantly from a high of $ 6,907 at the beginning of Friday.


You can see the price of BTC here.


Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.


Minh Anh


According to Coindesk




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