Historically Accurate Bitcoin Indicator Breaks Out of Buy Zone in ‘Unprecedented’ 2022 Bear Market


Bitcoin (BTC) has been enjoying what some are calling a “bear market rally” and gained 20% in July, but the price movement is still confounding analysts.

As July’s monthly close approaches, the Puell Multiple has broken out of its bottom zone, leading to hopes that the worst of the losses may be in the past.

Puell Multiple attempts to cement a breakthrough

The Puell Multiple is one of the most famous Bitcoin indicators on the chain. It measures the value of bitcoins mined on a given day compared to the value of those mined over the past 365 days.

The resulting set is used to determine whether the coins mined for a day are particularly high or low relative to the year’s average. From this, the miner’s profitability can be inferred, along with more general conclusions about how overbought or oversold the market is.

Having reached levels that traditionally accompany macro price bottoms, the Puell Multiple is now aiming higher – something traditionally seen at the start of macro price uptrends.

“Based on historical data, a breakout from this zone was accompanied by a build-up of bullish momentum on the price chart,” Grizzly, a contributor to on-chain analytics platform CryptoQuant, wrote in one of the firm’s July 25 “Quicktake” market updates.

Multiple Puell diagram (screenshot). Source: LookIntoBitcoin

The crowd isn’t the only signal flashing green under current conditions. As Cointelegraph reported, the bullish trends among hodlers also suggest that the macro bottom has already occurred.

“Unprecedented macroeconomic conditions”

After its surprise bounce in the second half of this month, Bitcoin is now near six-week highs and far from a new macro bottom.

Related: Bitcoin Futures Data Shows ‘Improving’ Sentiment Despite -31% GBTC Premium

As sentiment moves out of the “fear” zone, market watchers point to unique phenomena that continue to make the 2022 bear market extremely difficult to predict with any certainty.

In another of its recent “Quicktake” studies, CryptoQuant noted that even price trends are not acting normally this time.

Specifically, BTC/USD has crossed its realized price level several times in recent weeks, something that has not happened in previous bear markets.

The realized price is the average that the BTC supply has last moved and is currently just under $22,000.

“The realized price has signaled market bottoms in previous cycles,” explained CryptoQuant.

“More importantly, Bitcoin price did not cross the realized price threshold in the last two periods (134 days in 2018 and 7 days in 2020). However, since June 13, it has passed back and forth between this level three times, indicating that the uniqueness of this cycle due to unprecedented macroeconomic conditions.”

Graph of realized price of Bitcoin. Source: Glassnode

These conditions, as Cointelegraph reported, came in the form of forty-year highs in inflation in the United States, rampant interest rate hikes by the Federal Reserve, and the most recent signals that the US economy has entered a recession.

In addition to the realized price, meanwhile, Bitcoin is forming an unusual connection with its 200-week moving average (MA) in this bear market.

Although it usually keeps it as support with short dips below, BTC/USD managed to turn the 200-week MA into resistance for the first time in 2022. It currently sits around $22,800, data from Cointelegraph Markets Pro shows and TradingView.

BTC/USD 1-week candlestick chart (Bitstamp) with 200-week MA. Source: TradingView

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