Bitcoin (BTC), which is currently experiencing a “bear-market rally”, has increased 20% in July. However, analysts are still confused by the price action.
The Puell Multiple is moving towards its July monthly close. This means that it has moved out of its bottom zone. There are hopes that the worst losses may now be behind them.
Puell Multiple attempts to cement the breakout
One of the most well-known on-chain Bitcoin metrics is The Puell Multiple. It compares the current value of bitcoins mined over the past 365 day to determine the value of each.
This multiple can be used to determine if a day’s production is significantly higher or lower than the average for the year. This allows you to infer miner profitability, as well as general conclusions about the market’s overbought and oversold levels.
The Puell Multiple has reached levels that are traditionally associated with macro price bottoms. Now, it is aiming higher — something which was traditionally seen at the beginning of macro price uptrends.
“Based on historical data the breakout from the zone was accompanied with gaining bullish momentum on the price chart,” Grizzly wrote in one the firm’s “Quicktake” market updates on July 25, 2018.
Screenshot of Puell Multiple chart Source: LookIntoBitcoin
In current conditions, the Multiple signal is not the only one that flashes green. Cointelegraph reported that accumulation trends among hodlers also suggest that the macro bottom may be in place.
“Unprecedented macroeconomic circumstances”
Bitcoin has seen a surprise rebound in the second half this month and is now at its highest level in six weeks. It’s also far from a macro low.
Related: Bitcoin futures data shows ‘improving’ mood’ despite -31% GBTC premium
Market watchers continue to point to unusual phenomena that make it extremely difficult for market analysts to predict the bear market in 2022 with any certainty, as sentiment leaves the “fear zone”.
CryptoQuant reported in another “Quicktake” research piece that price trends are not as normal.
BTC/USD has been crossing its realized price level multiple times in the last weeks, something that did not happen in previous bear markets.
The real price is the average price at which Bitcoin supply has moved in the last 24 hours. It currently hovers below $22,000
CryptoQuant explained that the Realized Price signals market bottoms in previous cycles.
“More important, the bitcoin price has not crossed the Realized Price threshold in the past two periods (134 days in 2018, and 7 days 2020). It has crossed this threshold three times since June 13th, which is a testament to the uniqueness of this period due to macroeconomic conditions that are unprecedented.”
Chart showing the price of Bitcoin. Source: Glassnode
These conditions have been reported by Cointelegraph as forty-year highs of inflation in the United States, massive rate increases by the Federal Reserve, and the most recent signals that the U.S. has entered recession.
Bitcoin’s realized price has been correlated with its 200-week moving mean (MA) during this bear market.
BTC/USD turned the 200-week MA into resistance in 2022. This is a change from the normal practice of keeping it as support, with occasional dips below. According to Cointelegraph Markets Pro data and TradingView, it currently stands at $22,800.
BTC/USD 1-week candle charts (Bitstamp), with 200-week MA. Source: TradingViewcom. You should do your research before making any investment or trading decision.
Eileen Wilson –Technology and Energy
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