As a seasoned researcher with years of experience in the dynamic world of cryptocurrencies, I find myself constantly analyzing charts and on-chain data to decipher the intricate patterns that drive market movements. Today, I find Bitcoin’s current position intriguing. Technically, it seems to be holding steady, but the lack of robust trading volume raises concerns about its longevity.
At the moment of writing, Bitcoin is holding steady, with resistance coming from the range of approximately $56,300 to $57,000, as shown on the day chart. From a technical standpoint, traders who are selling seem to be in control based on their efforts and results.
To see a reversal in the immediate price trajectory, it’s necessary for the market to recover the declines experienced during September 1. Concurrently, this upward movement should be accompanied by an increase in trading activity.
At present, Bitcoin appears to be stable. But, as we can see from the data on September 2, the trading activity seems rather low.
To ease concerns and boost confidence among optimistic traders, it’s crucial to see a significant increase in trading activity, indicating that buyers have returned to the market.
Bitcoin Expands, Puell Multiple Ratio In Neutral Zone
Although Bitcoin appears to be stabilizing, according to a particular analyst who uses on-chain analysis, it might still be premature to rejoice as the recent growth did not significantly boost the Puell Multiple (as tracked by CryptoQuant) immediately.
The reading currently sits at 0.65, which falls within the 0.6 and 0.8 range. In this area, Bitcoin holds a neutral position. For traders to find potential opportunities, either the Puell Multiple needs to significantly increase above 0.8 or decrease back to the 0.6 zone.
As an analyst, I examine the Puell Multiple, which quantifies the daily value of Bitcoin (BTC) issuance relative to its yearly average. Given that issuance varies over time, this metric can fluctuate significantly. Notably, in recent months post the Halving event on April 20, the Puell Multiple has remained within a narrow band of approximately 0.6 to 0.8.
Referencing a trend observed over the past decade, the analyst noted that when the Puell Multiple falls below 0.6, it often presents low-risk, high-yield investment chances, especially for individuals employing Dollar-Cost Averaging (DCA) tactics. In simpler terms, this means that at these times, buying could potentially yield higher returns with minimal risk, which is particularly beneficial for those who invest a fixed amount regularly.
If the ratio rises beyond 0.8, this generally indicates a bullish market sentiment, suggesting that prices might continue rising significantly. Typically, when the ratio exceeds 0.8, prices often increase, hitting new record highs.
Bitcoin Building Bullish Momentum?
By examining the correlation between the Puell Multiple ratio’s pattern and its corresponding price movements, it becomes quite evident that they align almost perfectly.
For example, when prices dropped to around $49,000 on August 5, the Puell Multiple ratio, which tends to follow rather than lead, fell to 0.549. Subsequently, prices increased, causing the ratio to rise as well.
The bounce back from the 0.60 area is significant. This potential trend might indicate that the cryptocurrency, despite being bearish currently, is gradually gaining strength.
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2024-09-02 18:12