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• The metric may be largely associated with the China crypto crackdown.
• Currently the multiple has dipped below the 0.5 mark. This hints that the currently issued bitcoin is relatively less valued than the previously issued ones.
• The hash rate drastically declined from 140 per second (EH/s) to a 14-month low of 94 EH/s.
The current key bitcoin indicators suggest that the cryptocurrency is valued less than it should be. In addition it suggested that a price bounce was very likely ahead. Currently, the token is trading at $34,812.63 and is down by 2.63% in the past 24 hours. Bitcoin’s market capitalization stands at $653.03 billion and daily trade volume is $34.14 billion. On June 22, BTC plummeted down to $29,458.35, the lowest it has been in the past three months. Bitcoin tried to hold its position above the $35000 mark but again on June 26 it fell down to $30,405. Bitcoin has lost almost 40% of its value ever since it reached its all time high of $63,000 in April.
Puell Multiple Indicates a Flash Signal
However, according to Ben Lilly, a crypto economist at Jarvis Labs the key bitcoin indicator’s information may be a little misleading. In a recent Substack post the economist said that the Puell Multiple is indicating a flash signal. However, she warns that the metric may be largely associated with the China crypto crackdown. The Puell Multiple is basically the ratio of the daily issuance of bitcoin in U.S. dollar terms and the 365-day moving average of the daily issuance value. Currently the multiple has dipped below the 0.5 mark. This hints that the currently issued bitcoin is relatively less valued than the previously issued ones.
China’s Mining Crackdown has Drastically Affected the Hash Rate and Daily Issuance
The latest Puell Multiple readings indicate that the bull market is likely to resume soon. The reason behind this is because the ratio’s drop into the green zone followed by a dip in the hash rate and the daily issuance brought about by China’s reiteration of its crypto policies. China contributes two-third of the total mining activities across the world. During May, the Chinese regulators had mandated the miners in the Sichuan and other mining hubs to shutdown their operations. Consequently, the hash rate drastically declined from 140 exahashes per second (EH/s) to a 14-month low of 94 EH/s. The daily issuance suffered a lot as it declined from 900 BTC to 760 BTC.
Puell Multiple has clearly entered the buy zone as Chinese miners continue to go offline because of China’s rescaling measures. However, this is expected to be temporary as more and more miners are shifting to the US and Kazakhstan to restart their mining operations. Lily in her article added that is a particular case of a one-off event and the hash power will return sooner than we expect it to. More than 900 BTC will be mined everyday, because the hash rate will decrease the difficulty of each block.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
