A popular Bitcoin indicator that traders use to gauge miner selling activity is approaching a level that signals a promising buying opportunity for Bitcoin, according to a crypto analyst.
“The Puell Multiple index is fluctuating between these two critical levels. If historical patterns hold, a bearish scenario where the index drops below 0.6 could once again signal a favorable buying opportunity for investors,” CryptoQuant contributor Grizzly explained in an Aug. 31 analyst note.
On April 20, around the Bitcoin halving, the Puell Multiple Index score was 1.76. Source: Bitbo
Grizzly explained that the range between 0.6 and 0.8 on the Puell Multiple Index is known as the “Decision Zone.”
He noted that historical data dating back to 2014 showed that when the index drops below the 0.6 threshold, it has often signaled an ideal opportunity for Bitcoin (BTC) Dollar-Cost Averaging (DCA) strategies.
Traders use indicator as miner activity metric
Traders typically use the Puell Multiple to estimate the health of miner revenues. A high Puell Multiple, for example, might suggest low sell pressure whereas a low Puell Multiple may indicate high sell pressure.
At the time of publication, the Puell multiple is reading a score of 0.69, according to Bitbo data. To provide some context, when Bitcoin hit its all-time high of $73,679 on March 13, the Puell Multiple was at 1.88.
Bitcoin is currently trading at $58,416, down 8.98% over the past seven days, according to CoinMarketCap data.
Pseudonymous crypto analyst Moustache told their 133,100 X followers that the Puell Multiple is signaling one of the best opportunities to buy in over two years.
“I call it here: This is your second best chance after 2022 to re-accumulate before the next wave starts” Moustache declared.
However, how long Bitcoin remains in this uncertain range is a debate among traders.
Pseudonymous crypto trader Rekt Capital believes there is a possibility that Bitcoin could “breakout” of its reaccumulation range as early as “late September.”
However, Rekt believes it is more likely Bitcoin will “consolidate” through September before an “October breakout.”
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