The crypto market is optimistic as Bitcoin recovers $ 35,500 on June 28. As a result, some expect a bullish trend to begin in the short term.
However, the failure to maintain the $ 35,000 resistance despite these bullish moves indicates that traders are closing their positions each time they break out of the resistance, and should be wary of further declines. Some analysts point out.
In the midst of such negative voices, David Puel, an analyst who developed the index “Puel Multiple” that focuses on the daily issuance of Bitcoin and the profitability of miners and explores market trends, said the index. Pointed out that there was a fifth Bitcoin buy signal in history.
$ 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
Puel Multiple is calculated by dividing the daily issuance amount of Bitcoin by the 365-day moving average of the issuance amount.
As shown in the above figure, from Puel Multiple, the rising market started when the index entered the range indicated by the green box, and it fell sharply when it entered the range indicated by the red box. I understand.
Examples of Puel Multiple’s buying in the past include the “Cryptocurrency Winter Era (Crypto Winter)” in mid-2018 and the March 2020 when prices plummeted due to the new Coronavirus.
At the end of 2017, when the Bitcoin price reached its highest level at that time and in the bull market in 2013, it showed a sell signal (red box).
Historically low level of mining difficulty
The reason Bitcoin prices have been struggling these days is that many large mining farms have been closed and relocated to other countries due to the crackdown on miners in China. Analysts have pointed out that the hash rate has plummeted from its historically highs, bringing the next mining difficulty adjustment to historically low levels.
Miners sell their Bitcoins because they need to make more money than the fixed costs of mining. More recently, Bitcoin prices have fallen in half from their highests, requiring double sales of Bitcoin to cover the same costs as before, and miners relocating their businesses from China. There was a lot of selling pressure to raise money.
Bitcoin prices are currently rising slightly, but Puell said multiple factors should be considered and none of the indicators should be used alone in decision making.
Translation / Editing Cointelegraph Japan