Is Bitcoin Top Already In? Puell Multiple Suggests So

On-chain data shows the Bitcoin Puell Multiple has recently touched levels that historically lead to local tops for the cryptocurrency’s price.

Bitcoin Puell Multiple Has Recently Made A Retest Of Historical Resistance

As an analyst in a CryptoQuant Quicktake post explained, the Puell Multiple has held relevance for the asset’s price throughout the past. The “Puell Multiple” refers to an indicator that measures the ratio between the daily Bitcoin miner revenue (in USD) and its 365-day moving average (MA).

The “miner revenue” here only includes the block rewards these chain validators receive for solving blocks on the network. The transaction fees, the other component of the total income of the miners, aren’t taken into account by the indicator.

The block rewards directly correlate with the cryptocurrency’s price, as their BTC value naturally remains fixed (except for during halving events, where they are permanently cut in half). Still, the USD value fluctuates with the spot price.

The transaction fees don’t carry the same relationship, as their value depends on the traffic conditions on the blockchain. Users are only incentivized to attach higher fees when the mempool involves long waiting times.

The traffic does tend to go up as the price rallies since more investors are attracted to the chain and make transactions, clogging up the mempool. But such a rush could happen for reasons unrelated to the price, like how it happened recently due to the Inscription craze.

As the Puell Multiple compares the miners’ block rewards revenue against its yearly average, it can tell us whether the miners are making more or less than normal.

If the miners’ baseline is considered a “true value” for the asset, then the indicator’s value can provide hints about whether the cryptocurrency is currently overvalued.

Now, here is a chart that shows the trend in the 7-day exponential moving average (EMA) Bitcoin Puell Multiple over the history of the coin:

The value of the indicator appears to have seen a sharp surge recently | Source: CryptoQuant

From the chart, it’s visible that the historical bull run tops have formed when the Bitcoin Puell Multiple has had high values (often inside the red zone), as miners are making significantly more than the average for the past year at these levels, suggesting an overpriced status for the asset.

Similarly, major bottoms in the cryptocurrency have occurred when the metric has plunged under the 1 mark (the green box), the territory where miners are making less than usual.

Interestingly, another pattern in the same chart has also been highlighted, as the quant has highlighted. It appears that Bitcoin has also often hit at least local tops when the indicator has reached the same values as it has been showing recently.

If this pattern holds up this time as well, then Bitcoin may potentially have already hit its top for now, as the Puell Multiple has touched this level of historical resistance.