Puell Multiple

Puell Multiple is defined as the ratio of the daily value of the issued coin in USD divided by 365 days moving average of the daily value of issued coins in USD.

Definition

Puell Multiple is defined as the ratio of the daily value of the issued coin in USD divided by 365 days moving average of the daily value of issued coins in USD.

$$\text{Puell Multiple} = \frac{\text{Mining Revenue in USD}}{\text{365 days moving average (Mining Revenue in USD)}}$$

Interpretation

Puell Multiple can be interpreted as "If all mined bitcoins were sold immediately in the market, how profitable mining pools are compared to last historical one year?" This metric explores market cycles from the global mining revenue perspective.

Miners are the only entity that requires constant cost such as running electricity. Thus, miners' behaviors are always linked to price to certain degree. Puell Multiple compares 365 days average estimated revenue with short-term revenue of miners.

By Value Itself

Predicting Price Tops and Bottoms with the Puell Multiple

• Values over ‘4’: Short Signal

  If Puell multiple rises, it indicates that price=Miner's revenue is increasing significantly compared to the cost they put in. In this phase, bitcoin soared to point where Miner's revenue far exceeds the cost they put in. If we put regard bitcoin's true value with miners' cost (POW) and hashrate, this could indicate that bitcoin is overpriced.

  In other words, this could indicate that price is overvalued along with the increasing miner's motive to sell.

• Values under ‘0.5’: Long Signal

  If the Puell multiple decreases, it indicates that price=Miner's revenue is decreasing significantly compared to the cost they put in. In this phase, bitcoin can become extremely volatile, and prices plunge to the point where miners can't handle the fixed costs of electricity from their mining hardware, making some miners stop their mining action.

  In other words, this could indicate that the price is undervalued along with the increasing miner's motive to hold their bitcoin reserve.

By Examining Trend

It shows miners' short-term revenues relative to long-term profits.

• Increasing trend: Marketcap (Price) is heating up compared to miners' cost

• Decreasing trend: Marketcap (Price) is cooling down compared to miners' cost

Decoding Puell Multiple Framework: Market Cycles

Let's streamline its interpretation:

High Puell Multiple: Caution Flag

• Indicator: Potential market top.

• Implication: May signal overvaluation as miners sell bitcoins at higher prices.

Low Puell Multiple: Buying Window

• Indicator: Potential market bottom.

• Implication: Opportunity for providing advantageous profit-taking as Bitcoin miners sell at relatively lower prices.

Halving Events: Puell Dynamics

• Pre-Halving: Expect highs as supply anticipation rises.

• Post-Halving: Reflects shifts in miner behavior and market response.

Sentiment Gauge: Rapid Insights

• Indicator: Shifts in miner sentiment.

• Implication: Early indicators of potential market trends.

For the strategic Bitcoin investor, combining Puell Multiple insights with other indicators is key for a nuanced understanding of the dynamic cryptocurrency landscape. As you navigate Bitcoin's economy, Puell Multiple stands as a concise guide, unraveling hidden narratives within miner activities and market sentiments—a must for strategic Bitcoin investors.

Link to Our Data

• Puell Multiple in CryptoQuant Live Chart

• Puell Multiple in CryptoQuant Data API Docs