Bitcoin miner sell-off fears as Puell Multiple nears ‘red zone’ last seen at 2017 peak


A return to the peak of the 2017 bull market could signal “major macro highs” for Bitcoin, but this time, institutions are here, says analyst Philip Swift.

Bitcoin (BTC) miners are selling less and less BTC, but if one metric is correct, they could soon start causing a major price correction.

In an update on March 11, Philip Swift, creator of on-chain data resource LookIntoBitcoin, flagged familiar warning signs from the Puell Multiple.

Developed by David Puell, the Puell Multiple tracks when miners are likely to start selling en masse in order to realize profits from participating in the Bitcoin network.

It divides the value of “new” BTC issued per day by one-year moving average issuance, both in U.S. dollars, to give an insight into where selling would be most profitable for miners.

A look at the multiple’s historical performance shows that highs — when its value enters an upper red zone on the chart — coincide with Bitcoin price peaks and subsequent sell-offs.

For Swift, with the multiple now closer to the red zone than at any time since late 2017, the danger is clear.

“The Puell Multiple, which looks at miner rev today vs. historical norms is approaching the overbought red band,” he summarized in comments on the historical chart:

“Historically, when the Puell Multiple (red line) breaches into the upper red band this has coincided with major macro highs for $BTC price, as miners begin to realise their gains.”

Bitcoin Puell Multiple vs. BTC/USD chart. Source: LookIntoBitcoin

In 2021, the chart is pitted against a new phenomenon which was only just beginning in late 2017 — institutional investment in Bitcoin. This year has been characterized by largescale buy-ins from institutions, and as Swift notes, the question is now whether miners can still force the market downwards despite their appetite for HODLing.

Fellow analyst Cole Garner responded with data from on-chain analytics service Glassnode, this also showing Bitcoin price corrections following larger outflows from mining pool Poolin this year.

“This chart would argue that they did a pretty good job of dumping price OR they’re smart money, and knew exactly when to sell,” he commented.

Poolin miner outflow chart (annotated) vs. BTC/USD. Source: Cole Garner/ Twitter

Outflows stay bullishly low

Nevertheless, overall desire to sell among miners remains negligible compared to previous years.

In its latest weekly report, crypto index fund tracker Stack Funds highlighted the fact that, when taken as a seven-day average, outflows from mining pools are at their lowest since 2016.

That year saw outflows break below a long-term support level, which in turn preceded the bull run to $20,000 over the next two years.

“This occurred twice during the past year alone, in May 2020, and at the end of January this year,” Stack wrote.

“The double break provides further affirmation that miner’s outflows will probably continue to remain low, which could be a catalyst for prices to float higher.”

Bitcoin miner outflows 7-day average chart (annotated) vs. BTC/USD. Source: Stack Funds

With expectations of a further upside still in place, researchers also considered the potential floor should suppression nonetheless return. As Cointelegraph reported, this is likely $46,000 at worst, with that level forming Bitcoin’s strongest support since it crossed $11,000 last year.

“Overall, most fundamental indicators suggest that miners are back into accumulating, and we expect $50,000 to be a strong support handle for Bitcoin in the near term,” the report concluded.

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