- BTC’s daily Puell Multiple attempted to move above its 365-day moving average.
- Historically, this has preceded a jump in the value of BTC.
Bitcoins [BTC] The daily Puell Multiple is poised to cross above its 365-day moving average, signaling the potential for an upside rally, data from CryptoQuant has shown.
Source: CryptoQuant
BTC’s Puell Multiple measures the ratio of BTC mined daily to the 365-day average price.
When it returns a high value (above 4), miners are raking in profits higher than their usual costs, potentially causing them to sell some of their holdings, putting downward pressure on the price.
Conversely, a low Puell Multiple (less than 0.5) indicates that miners are struggling with low profits and are more likely to hold on to their coins to avoid losses.
In a new reportThe chart from pseudonymous CryptoQuant analyst DataScope shows that historically, a crossover of the daily Puell Multiple above the 365-day moving average has often been followed by periods of BTC price appreciation.
According to the analyst:
“The relationship between daily Puell Multiple values and the 365-day Puell Multiple moving average can indicate market trends, with a daily Puell Multiple above the 365-day moving average often indicating an upward price trend.”
There is no rally in sight in the short term
Although many predicted a rally above $50,000 following the ETF’s adoption, BTC peaked at $48,625 on January 11 and has been trending downward ever since.
Exchanging hands for $40,918 at the time of writing, the leading coin’s value has fallen 16% over the past ten days, according to data from CoinMarketCap.
Also, the impending crossover of BTC’s daily Puell Multiple above the 365-day moving average suggested the possibility of a rally.
However, the low trading volume over the past week indicated that this may not be possible in the short term.
An assessment of the coin’s daily trading volume based on a seven-day moving average showed that it has fallen 35% since January 14.
Dates of Santiment revealed that the low trading activity may be due to the negatively weighted sentiment that has followed the coin since the ETF went live.
BTC’s weighted sentiment, which returned a negative value at the time of writing, was -0.494.
Furthermore, the daily price chart of the coin showed that it had remained in a bear cycle since January 12, when the MACD line crossed below the trend line and produced negative values.
Source: TradingView
Read Bitcoin’s [BTC] Price forecast 2024-25
When an asset’s MACD line intersects its trend line and drops below the zero line, it indicates that the short-term moving average has moved below the long-term moving average, indicating that downward momentum is stronger than any upward trend.
Traders often interpret this as a sell signal, putting downward pressure on the price of an asset. Therefore, any potential price increase can be postponed until sentiment improves and the bulls try to regain control of the market.