In an update from 11. In March, Philip Swift, creator of onchain data source LookIntoBitcoin, noted the familiar warning signs of Puell Multiple.
Puell Multiple, developed by David Puell, lets you know when miners are likely to go wholesale to take advantage of their participation in the Bitcoin network.
It divides the value of new BTC issued per day by the rolling annual average of issuance in US dollars to get an idea of where sales would be most profitable for miners.
A look at the multiplier’s historical values shows that the spikes – when the value reaches the top red area on the chart – coincide with the spikes in the bitcoin price and subsequent selling.
For Swift, with multiples now closer to the red zone than at any time since late 2017, the danger is clear.
Puell’s multiple, which measures the miner’s current momentum relative to historical norms, is approaching an overbought red band, he summarized in a commentary on the historical chart:
Historically, when the Puell multiplier (red line) enters the upper red band, it coincides with major macro highs in the $BTC price when miners begin to realize their profits.Puell multiplier bitcoin vs BTC/USD chart. Source: ViewIntoBitcoin
In 2021, the chart faces a new phenomenon that only began in late 2017: institutional investment in bitcoin. This year has seen large scale institutional buying and as Swift notes, the question now is whether mining companies can still push the market lower despite their appetite for HODLing.
Analyst Cole Garner responded with data from online analytics service Glassnode, which also shows bitcoin prices adjusting due to a large outflow from Poolin’s mining pool this year.
Based on that chart, you could say they dumped pretty well OR they were smart and knew exactly when to sell, he noted.
Graph of Poolin miner turnover (annotated) against BTC/USD. Source: Cole Garner/Twitter
Outflow remains low
Nevertheless, the overall willingness of miners to sell remains low compared to previous years.
In its latest weekly report, crypto-index tracker Stack Funds highlighted the fact that seven-day average exits from mining pools are at their lowest level since 2016.
That year, outflows broke long-term support, prompting a rise to $20,000 over the next two years.
That happened only twice last year, in May 2020 and in late January of this year, Stack wrote.
The double breakout is further confirmation that mine exits are likely to remain weak, which could be a catalyst for price gains.
Bitcoin Miner Outflow 7-day average chart (annotated) vs BTC/USD. Source: Fund for accounts payable
In anticipation of a further increase, the researchers also found that the potential gender should be removed again. As Cointelegraph reports, that is likely to be $46,000 at worst, with that level representing the strongest support for bitcoin since it broke through the $11,000 mark last year.
Overall, most fundamentals suggest that miners have started accumulating again, and we expect $50,000 to be solid support for bitcoin in the near term, the report concluded.
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