Bitcoin Puell Multiple shows that miners are dumping

Tuesday, May 18

The Puell Multiple is calculated by dividing the daily issuance value of bitcoins (in USD) by the 365-day moving average of daily issuance value.

In other words, what are the miners doing with their bitcoin?

Miners are the only natural suppliers of BTC and effectively control the money supply. Why is this important? If we are expecting consolidation and a trend reversal short term, as many have predicted, we need to see that the store of value case for Bitcoin is valid.

Store of Value (SoV) can be described by the Digital Gold Theory. The idea is that Bitcoin acts in the crypto markets like gold does in the commodities markets. Gold is a standard to which we can compare other investments because we value it’s ability to hold value long term.

Miners are a huge piece of this concept.

When miners receive bitcoin for their efforts in producing new blocks, they typically HODL unless they have to liquidate for USD to cover operating expenses. In a bull market, we can only expect the value of new BTC that miners receive to appreciate in value.

If miners sell, that’s an indication that they believe the new coins are at the height of value and don’t expect the price to recover anytime soon.

The Puell Multiple

PM May 9– 2.9x, PM May 18–1.2x

Puelle Multiple = New Coins in Circulation / Moving Average for 365 days

We can see that May 9, the PM sat at 2.9x which tells us that new coins were released (by means of miner liquidation) at a rate that is 2.9x higher than the average over the last 365 days.

Miners have some insight that we don’t have, obviously.

Had miners thought that the 2 months of consolidation since March would start to trend up, they would hodl down and let their bitcoin appreciate. It is evident that miners are liquidating upfront in preparation of further negative price movement.

The most concerning part is that the dumping of miner coins has continued to accelerate. There’s no indication that the miners believe this is the bottom. A crucial support level was lost last night, and price can be expected to continue moving toward $33,800 to test the next level of support.

So long as the Puell Multiple graph moves down, the price will drop. We shouldn’t expect to see any reversal of the downtrend until the Puell bottoms out and starts moving up.




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Landrum Tyson

Landrum Tyson

I blog about: technology, philosophy, logistics & supply chain, crypto, blockchain, social science and anything else I find interesting.

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