Bitcoin (BTC) is enjoying what some call a “bear market rally” and gained 20% in July, but the price action still confuses analysts.
As July comes to an end, puell Meardère has come out of its bottom zone, leading to hope that the worst of the defeats may be in the past.
Multiple attempts to cement the rupture
The Puell Multiple is one of the best-known on-chain Bitcoin metrics. It measures the value of bitcoins mined on a given day compared to the value of the last 365 days.
The resulting number is used to determine whether the coins mined from a day are particularly high or low relative to the year’s average. From this, the profitability of miners can be deduced, along with more general conclusions about how the market is overbought or oversold.
After reaching levels that traditionally accompany macro price lows, The Puell Multiple is now reaching higher levels, something is traditionally seen at the beginning of macro price bullish trends.
“Based on historical data, the breakup of this zone was accompanied by getting a bullish momentum on the price chart,” said Grizzly, an employee of the cryptoquant on-chain analysis platform, writing in one of the company’s July 25 “Quicktake” brand updates.
Puell Multiple graphic (screenshot). Source: LookIntoBitcoin
The Multiple is not the only sign flashing green under current conditions. As CryptoTech reported, accumulation trends among holders also suggest that the macroeconomic bottom is already in.
“Unprecedented macroeconomic conditions”
After its surprise rebound of relief in the second half of this month, Bitcoin is now close to its highest level in six weeks and far from a new macro low.
As sentiment moves out of the “scary” zone, market watchers point to unique phenomena that make the 2022 bear market extremely difficult to predict with certainty.
In another of its recent “Quicktake” research pieces, CryptoQuant noted that even price trend lines are not traded normally this time around.
Especially BTC/USD has its price cross-leveled several times in recent weeks, something that did not happen in the previous bear markets.
The realized price is the average at which the BTC supply last moved, and it is currently just below $22,000.
“The price realized has signaled market funds in previous cycles,” CryptoQuant explained.
“More importantly, the price of bitcoin has not crossed the price threshold made in the last two periods (134 days in 2018 and 7 days in 2020). However, since June 13, it has crossed this level three times, showing the uniqueness of this cycle due to unprecedented macroeconomic conditions.”
Graph of bitcoin prices. Source: Google
Those conditions, as CryptoTech reported, have come in the form of forty-year highs in inflation in the United States, rampant rate hikes by the Federal Reserve, and most recently, signs that the U.S. economy has entered recession.
Meanwhile, in addition to the realized price, Bitcoin has formed an unusual relationship with its 200-week moving average (MA) in this bear market.
While it usually remains support with brief dips below, BTC/USD managed to shift the 200-week moving average to resistance for the first time in 2022.
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