On-chain data shows the Bitcoin Puell Multiple is close to setting new highs for 2023, a sign that a top may be becoming more likely for BTC.

As pointed out by an analyst in a CryptoQuant Quicktake post, the Puell Multiple is currently at the second highest level for the year. The “Puell Multiple” is an indicator that keeps track of the ratio between the daily Bitcoin miner revenue and the 365-day moving average (MA) of the same.

When the value of this metric is greater than 1, it means that the miners are currently earning more than the average for the past year. On the other hand, the indicator being below the mark suggests these chain validators are making less than usual right now.

One way to perhaps gauge the “true value” of Bitcoin is through the cost that miners incur for producing more of the cryptocurrency. Thus, when miners are making much more than the yearly average, it could be a sign that the asset may be becoming overpriced.

Similarly, the opposite case might imply an undervalued state for the asset. Now, here is a chart that shows the trend in the 7-day MA of the Bitcoin Puell Multiple over the last few years:

As displayed in the above graph, the 7-day MA Bitcoin Puell Multiple has been above 1 recently and has registered some sharp uptrend. This recent rise in the metric is naturally a result of the rally that the asset has observed, which has taken its price above the $37,000 level.

Following the surge, the miners are obviously enjoying much higher revenues than they have during the last 365 days. The current disparity is in fact the second highest it has been all year, as the indicator’s value is now floating just below the 2023 high set back in July.

Interestingly, as the quant has highlighted in the chart, it has been a bearish signal for the coin the last three times the 7-day MA Puell Multiple has arrived around the same levels as now.

That said, many other major tops in the asset have only occurred at much higher levels of the Puell Multiple. The first half of  the2021 bull run top, for instance, occurred when the indicator had crossed a value of 3, while the April 2019 rally saw its peak coincide with a value of 2.

If the same pattern as the last three instances follows this time as well, then Bitcoin might be close to forming a top. However, if the current run goes the same way as those other rallies instead, then miners might still have more space for growth before the cryptocurrency becomes too overheated.

After slipping under the level earlier, Bitcoin has recovered back above $37,000 again recently.

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