Bitcoin (BTC) Trading at a Discount, Puell Multiple Indicates Prime Buying Opportunity

<ul>
  <li>On-chain data shows the Bitcoin Puell Multiple has dipped into the “undervalued” territory for the first time in more than a year.</li>
  <li>This indicator tracks the ratio between Bitcoin miners’ daily revenue and the 365-day moving average (MA).</li>
  <li>“Investors may interpret the fall in the Puell Multiple as a sign that the market is adjusting to a new phase of scarcity, potentially preparing for a rally,” says the quant.</li>
</ul>
<p><strong>Discover the latest insights on Bitcoin's market dynamics as the Puell Multiple enters undervalued territory, signaling potential future trends.</strong></p>
<h2><strong>Bitcoin Puell Multiple Has Observed A Plunge Recently</strong></h2>
<p>As an analyst in a CryptoQuant Quicktake post pointed out, the BTC Puell Multiple has fallen recently. The Puell Multiple refers to an on-chain indicator that tracks the ratio between Bitcoin miners’ daily revenue and the 365-day moving average (MA).</p>
<h3><strong>Understanding the Puell Multiple</strong></h3>
<p>Miners earn their income through two means: block rewards and transaction fees. The former is what they receive as compensation for adding a block on the network, while the latter is a payment they get through all the individual transactions part of the block. In the context of the Puell Multiple, though, only the block reward is included in the miners’ revenue. The block rewards almost always remain fixed in terms of BTC value, so the only variable related to them is the USD value of the rewards.</p>
<p>As such, the indicator measures revenue in USD. Thus, there is a connection between the cryptocurrency’s price (which guides the block reward’s value) and the Puell Multiple. When the value of this metric is greater than 1, it means that the miners have earned more than the average for the past year. In such a condition, the price of the asset may be considered overvalued. On the other hand, the indicator is lower than this threshold, suggesting that miners are currently making less than usual. Naturally, the coin may be considered undervalued when this happens.</p>
<h3><strong>Recent Trends and Implications</strong></h3>
<p>Now, here is a chart that shows the trend in the 7-day MA Bitcoin Puell Multiple over the past few years:</p>
<p>The value of the metric appears to have taken a plunge in recent days. The graph shows that the 7-day MA of the Bitcoin Puell Multiple was at relatively high levels earlier when the rally toward the new all-time high occurred. Recently, though, the indicator’s value has plunged sharply. At the same time, however, cryptocurrency’s price has been consolidating sideways.</p>
<p>So, what has changed miner revenues if the price hasn’t dropped? As mentioned before, block rewards almost always remain constant. Almost. The one exception is the Halving event, which occurs approximately every four years. During this event, the asset’s block rewards are permanently slashed in half. The latest Halving occurred last month, so the Puell Multiple has registered such a steep drop.</p>
<p>With this drawdown, the indicator’s 7-day MA is now below 1. “Investors may interpret the fall in the Puell Multiple as a sign that the market is adjusting to a new phase of scarcity, potentially preparing for a rally,” says the quant.</p>
<h3><strong>Conclusion</strong></h3>
<p>The recent dip in the Bitcoin Puell Multiple into undervalued territory highlights significant shifts in the market dynamics. As miners adjust to reduced block rewards post-Halving, the market may be gearing up for a new phase of scarcity. Investors should closely monitor these developments, as they could signal potential bullish trends in the near future.</p>