- The Puell Multiple suggests that Bitcoin is undervalued, indicating potential investment opportunities.
- Recent market volatility led to significant liquidations, with Bitcoin traders facing losses of over $71 million.
Bitcoin [BTC]the pioneering crypto, recently enjoyed a rally that pushed the price above $71,000 earlier this week.
However, Bitcoin is currently seeing a decline of 3.3% in the past 24 hours, bringing its trading price down to $67,197 at the time of writing. Despite this, the asset has maintained an uptrend all week, rising 2.3%.
Amid these fluctuations, Bitcoin has experienced significant changes in market dynamics, including adjustments in mining difficulty and hash rate, as well as shifts in trading behavior that have led to notable liquidations.
Understanding miners’ earnings and market valuation
In the context of this price volatility, a CryptoQaunt analyst recently did this shared an on-chain data that has provided insightful indicators for Bitcoin’s valuation.
The Bitcoin Puell Multiple, an on-chain metric that calculates the ratio of BTC’s daily issuance value to the 365-day moving average of issuance, is in what is traditionally considered ‘undervalued’ territory.
Source: CryptoQuant
This move suggests that Bitcoin may be trading at a discount despite the price drop, presenting potential opportunities for investors.
The Puell Multiple is specifically designed to measure the economic health of Bitcoin mining operations by comparing miners’ daily earnings to a historical average.
Miners earn income through block rewards, which are consistent in BTC terms but fluctuate in USD value, directly affected by Bitcoin’s price changes.
When the Puell Multiple is above 1, it typically indicates that miner revenues are higher than the average, indicating that Bitcoin may be overvalued relative to historical norms.
Conversely, a Puell Multiple below 1, as is currently the case, indicates that miners are earning less, which could imply that Bitcoin is undervalued.
This drop in the Puell Multiple coincides with Bitcoin’s recent halving, which cut miner rewards by half, significantly impacting the metric.
The timing of these shifts is crucial as they align with broader market movements, including Bitcoin’s price consolidation and increased network activity, characterized by a rising hash rate, that has recently exceeded 600 EH/s.
Source: Bitcoihasrateindex
This increase in hash rate follows a significant adjustment in mining concerns, due to growing optimism and activity in the cryptocurrency market, possibly fueled by the recent anticipation of the approval of spot Ethereum ETFs in the United States.
Recent Liquidations and Future Market Predictions
The recent decline in Bitcoin’s price has not only impacted investors’ portfolios but has also led to significant market liquidations.
In the last 24 hours, Bitcoin long traders confronted about $57.84 million in liquidations, while short traders also suffered significant losses at about $13.75 million.
These events contributed to a total of $390.80 million in crypto liquidations, affecting more than 107,700 traders worldwide.
Source: Coinglass
Despite the current market challenges, the recent AMBCrypto report suggests so Bitcoin could soon enter an ‘escape velocity’ phasepotentially pushing the price past $73,000.
This phase is expected to mark a significant bullish trend, possibly driven by increased investor interest and broader developments in the financial markets.