The Bitcoin Market Is Turning Bullish

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The Puell Multiple Is Turning Bullish on Bitcoin

Bull, c. 17th–18th century. (Credit: Metropolitan Museum of Art)

Omkar Godbole

The Puell Multiple Is Turning Bullish on Bitcoin

Bitcoin’s (BTC) recent sell-off has pushed prices on the top cryptocurrency by market capitalization into a historically attractive zone, according to one indicator.

Prices fell from $10,200 in mid-February to 12-month lows below $4,000 last week, dashing many hopes for a strong rally ahead of the May 2020 mining reward halving.

However, with the price slide, a key indicator called the “Puell Multiple” has declined to levels suggesting the value of newly issued bitcoins on a daily basis is quite low compared to historical standards.

Put simply, this signals appears to show the cryptocurrency is now undervalued.

The Puell Multiple is calculated by dividing the daily issuance value of bitcoins in U.S. dollar terms by the 365-day moving average of the daily issuance value.

Daily issuance refers to new coins added to the ecosystem by miners, who receive coins as rewards for validating blocks on the blockchain. Miners usually cover mining costs by selling coins into the market.

Puell Multiple, Dec. 2020 to Mar. 2020 Source: Glassnode

The Puell Multiple slipped to 0.41 on March 16, the lowest level since Jan. 17, 2020 and was last seen at 0.47, according to data provided by the blockchain intelligence firm Glassnode.

The metric is now hovering in the green zone or the range of 0.3 to 0.5, which has marked bear market bottoms in the past.

Historical data also shows the indicator enters the green zone in the last leg of the bear market following which the bearish momentum weakens.

2020 bear market

Bitcoin’s bear market from the record high of $20,000 reached in December 2020 ended at lows near $3,200 in mid-December 2020, with the Puell Multiple hitting a low of 0.30.

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Puell Multiple, 2020 bear market Source: Glassnode

The indicator entered the green zone during the last leg of the bear market, which began on Nov. 14, 2020, when prices fell below the long-held support of $6,000 and slipped to $4,000 by Nov. 20.

On that day, the Puell Multiple fell below 0.5, signaling undervaluation. The selling pressure ebbed in the following days, allowing a recovery from $3,400 to $4,400 in the last week of November.

While the bounce was short-lived, the sellers could not do much damage, as evidenced by prices bottoming out just $200 below November’s low of $3,400 on Dec. 15. That’s when the Puell Multiple was hovering near 0.30.

Puell Multiple 2020 Source: Glassnode

Going back more than half a decade, bitcoin’s downward move from the November 2020 high of $1,100 came to an end near $150 in January 2020. The Puell Multiple also bottomed out near 0.30 in mid-January. Similarly, the preceding bear market had ended in November 2020 with the indicator’s drop to 0.30.

Is the bear market over?

The latest under-0.50 reading on the indicator suggests the worst is behind us. Other metrics like the market value to realized value (MVRV) Z-score are also indicating undervaluation.

However, the cryptocurrency might not be out of the woods yet, as the Puell Multiple hasn’t dropped to 0.30 – the level which has marked bear market lows in the past.

If history is a guide, we may see one more bout of selling, which could likely push prices back to the $5,000-$4,000 range and the Puell Multiple down to 0.30.

“We can certainly retest recent lows once or twice,” Mike Alfred, CEO of Digital Assets Data, told CoinDesk, while adding that dips below $5,000 will be short-lived, courtesy of strong demand from long-term holders – investors who bought bitcoins before the massive rally from $6,000 to $20,000 seen in the fourth quarter of 2020 and during the last five weeks of 2020.

Bitcoin is currently trading near $6,550, representing a 69 percent from recent lows under $4,000. Prices hit a high of $6,907 early Friday, according to CoinDesk’s Bitcoin Price Index.

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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

The Bitcoin Market Is Turning Bullish

The Bitcoin Market Is Turning Bullish, But How Long Can It Last?

The Bitcoin market has been drifting lower desperately in search of support for some time. The world’s leading cryptocurrency made a stunning recovery earlier this year and then gave up half the gains with equal quickness. Bitcoin has hit, and smashed through, several support targets on its way down and now it is sitting on another one. The coin bounced off of the $7000 level last week and now looks like it is ready to move higher. The question is, how high will it go? Is this just another mid-trend relief rally or could it be, might it be, the beginning of the next big move up for Bitcoin?

Let’s look at the weekly chart first. The weekly chart shows an asset bouncing above a support target with indicators that are hardly bullish. If, and I say if, Bitcoin prices were to move higher from here the indicators are set up to show support. If the indicators were to produce a bullish crossover at this level or during the bounce it would be a technically “strong” signal. Bu I said if. As things stand now, the Bitcoin weekly chart is still set up for the coin to move lower. Don’t be surprised if it does.

Now, let’s move on the daily chart. The daily chart clearly shows a coin that is bouncing. What it also shows is a battle between the bulls and bears at the $7500 level. Prices bounced strongly from $7,500, moved up to the down trend line, fell hard to retest $7500, and now the battle of buyers and sellers is holding steady at/near $7,500. The trend is in favor of the bears, the indicators in favor of the bulls. Divergences in both stochastic and MACD suggest the bears have overextended themselves, a fresh bullish-crossover in MACD that the bulls are taking control of the market.

The Final Analysis

The final analysis is promising. Bitcoin is indeed at a key level of support. If the bulls are able to get prices back over the 30-day EMA we’re likely to see a nice rally, at least for the near term. If not, if not then the downtrend is still intact and a fall below $7,500 is highly likely. If the $7,500 level breaks a move to $6,000 is possible.

Cryptocurrency Market Update: Bullish comeback as Bitcoin soars past $5,500

The cryptocurrency market is gradually turning bullish after an extended bearish session on Thursday. All the top three cryptos; Bitcoin, Ethereum and Ripple are in the green, by 2.83%, 3.17% and 1.3% respectively. The rest of the crypto market is painted green accept for selected digital assets such as Dash after dropping 4% on the day.

BTC/USD opened the session at $5,413 and advanced upwards to $5,475 (intraday high). Due to the selling dominance during the session, a low was also reached at $5,265. However, the bullish momentum is returning at the time of writing, which could pull BTC/USD above $6,000. In the meantime, it is essential that $5,500 is turned into a key support to allow the bulls to focus on breaking not only the resistance at $6,000 but focus on the critical level at $7,000.

ETH/USD is back to trading above $120 for the first time in two days. Selling activity has tested support at $115 severally. However, the bulls have returned with a bang aiming for $130. Ethereum is trading at $122 and counting at the time of writing.

XRP/USD has not been left behind but moving side by side with its peers. From the opening value at $0.1480, the price is teetering at $0.1503. If support is established above $0.15 then focus will shift drastically from $0.10 to $0.16.

Chart of the day: BTC/USD

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