The fall of the Puell Multiple after a halving of Bitcoin is a phenomenon that can have several implications and meanings for the market.
The halving, which occurs approximately every four years, halves the mining reward per block, directly impacting miners' income.
With the reward reduced, miners' daily revenue decreases substantially, unless the price of Bitcoin rises significantly to compensate for this reduction.
Given that the Puell Multiple is the ratio between daily revenue and the 365-day moving average, a sharp drop in daily revenue after halving leads to a decrease in the Puell Multiple, as the long-term moving average takes time to adjust to this new reality.
The reduction in miners' daily revenue indicates that mining has become less profitable, unless the price of Bitcoin increases significantly. The current range in which the Puell Multiple is quoted confirms Price discount, meaning that the network is potentially cheap.
The decrease in the supply of new bitcoins could create upward pressure on the price, especially if demand continues to grow. 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.
Therefore, this phenomenon could signal a phase of adjustment in the mining market, influence the supply and demand of Bitcoin and possibly anticipate significant movements in the price.
Written by G a a h