Debunking Misconceptions About the Puell Multiple: Analyzing On-Chain Evidence

The Puell Multiple is a popular indicator used to assess Bitcoin mining profitability. However, recent opinions suggesting an "overheated" Puell Multiple and the likelihood of a correction require closer examination. In this article, we will delve into the misconceptions surrounding the Puell Multiple and present a unique approach to understanding its implications in light of recent on-chain evidence.

Understanding the Puell Multiple

The Puell Multiple assesses mining profitability by comparing the value of newly mined Bitcoins to historical trends.

It answers the question of how profitable mining pools are compared to the previous year.

The formula for calculating the Puell Multiple is the ratio of the daily value of issued coins in USD to the 365-day moving average of the daily value of issued coins in USD.The Impact of "Ordinals" and Increased FeesThe Impact of "Ordinals" and Increased FeesThe Impact of "Ordinals" and Increased FeesThe recent flood of "ordinals" transactions and the subsequent spike in fees have generated significant revenue for miners.Some blocks' fees have even exceeded the base block reward, resulting in higher profitability for miners.

The Misinterpretation of Resistance Levels

The misconception that the Puell Multiple indicates a tough resistance level at 30k may have arisen due to a lack of understanding of its definition and implications.

Long-term bottom fishing indicators like Realized Price and LTH SOPR structure provide evidence contrary to a correction at this level.

Conclusion:

Contrary to popular opinions, the Puell Multiple does not suggest an overheated market or an imminent correction. The recent increase in fees and mining profitability should be considered in interpreting the indicator. On-chain evidence, including indicators like Realized Price and LTH SOPR structure, points to a continuing bull market. It is crucial to rely on comprehensive analysis and understand the nuances of on-chain indicators to make informed decisions in the dynamic Bitcoin landscape.

Takeaways:

The Puell Multiple assesses mining profitability by comparing newly mined Bitcoin's value to historical trends.

Recent increased fees and mining profitability have impacted the Puell Multiple.

Misconceptions surrounding resistance levels and an overheated market need to be reconsidered based on on-chain evidence.

On-chain indicators like Realized Price and LTH SOPR structure provide a more comprehensive view of the Bitcoin market.

Comprehensive analysis and understanding on-chain indicators are crucial for making informed decisions in the evolving Bitcoin landscape.

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