The Bitcoin Puell Multiple, a key on-chain metric used to gauge the profitability of Bitcoin miners, is currently signaling a potential bullish reversal for the major cryptocurrency.
According to a CryptoQuant analyst using the pseudonym Darkfost, the indicator recently fell into the “green zone,” a signal historically associated with rising Bitcoin prices. The analyst shared this insight on the CryptoQuant QuickTake platform earlier today.
A detailed explanation of the Green Zone and its impact on Bitcoin prices
The Puell Multiple measures the relationship between a Bitcoin miner’s short-term returns and the average returns over the past year. By comparing these figures, this indicator provides a glimpse into the overall profitability of miners and their potential impact on the broader market.
Miners, a key player in the Bitcoin ecosystem, influence market supply, and their decisions on whether to hold or sell mined Bitcoin can trigger significant price fluctuations.
The Puell Multiple is divided into two main zones, the “Red Zone” and the “Green Zone,” which provide important market insights. According to CryptoQuant analysts, the Red Zone, which features values higher than 4, indicates that miners are generating significant profits.
When miners are profitable, they are more likely to sell their Bitcoin holdings, which can lead to increased market supply and downward price pressure. Historically, reaching the red zone has often been preceded by a market correction.
On the other hand, the green zone, defined as a value below 0.5, indicates that miners are operating at very low profitability or even at a loss. When miners struggle to reach break-even, they may reduce their operations or even shut down their mining equipment altogether.
This reduces selling pressure in the market, often creating conditions for a bullish reversal. According to Darkfost, the Puell Multiple recently reached 0.5, indicating that miners are currently in the green zone. This is a strong indicator that the market is likely to turn upward.
Bitcoin Current Market Performance and Outlook
Given the current trend of the Puell Multiple indicator, the uptrend in BTC is clear, but the asset’s performance over the past few days has been very attractive.
In particular, since the US Federal Reserve announced its interest rate cut decision last Thursday, Bitcoin has shown a steady price increase every day, reaching a gain of nearly 10% last week.
The asset is currently trading at $62,830. This price comes as Bitcoin has seen a slight decline of 0.4% over the past day.
In terms of outlook, renowned cryptocurrency analyst Ali on X recently shared his outlook for Bitcoin, stating that if BTC follows the last two cycles, a market peak could occur by October 2025.
If this is it #bitcoin If the last two cycles continue, the market could peak around October 2025, about a year from now! pic.twitter.com/JJGpRcHbOA
— Ali (@ali_charts) September 24, 2024
Featured image made with DALL-E, charts from TradingView
Source: NewsBTC.com