A quant has pointed out that a popular on-chain indicator for Bitcoin gives the asset the green light to experience bullish price action.

As explained by an analyst in a CryptoQuant Quicktake post, the Bitcoin Puell Multiple is currently in the “safe to buy zone.” The “Puell Multiple” here refers to an on-chain metric that tracks the ratio between the BTC miners’ daily revenue and the 365-day moving average (MA) of the same.

The revenue here refers to the amount these chain validators earn by mining on the network by solving blocks. The rewards that miners earn remain constant in BTC value and are given at a constant rate.

Thus, the only variable in this group’s revenue is the cryptocurrency’s USD conversion rate. As such, miner revenues rise when the price increases and decline when it moves down.

At high prices, miners may have a strong motive to sell, adding to the market’s selling pressure. When the Puell Multiple has a high value (that is, miners are earning significantly more than the average for the past year), the asset’s price is assumed to be overvalued.

Similarly, cryptocurrency may be considered underpriced when miners make less than the norm, as they could decide to hold onto their mined BTC until better market conditions are achieved.

Now, here is a chart that shows the trend in the Bitcoin Puell Multiple over the entire history of the coin:

As displayed in the above graph, the Bitcoin Puell Multiple had been rising alongside the rally that Bitcoin had witnessed in 2023 and the first few months of this year.

However, the indicator’s value has plunged suddenly recently. The metric is now at 0.8, which suggests the miners are making less than the yearly average.

The Bitcoin price hasn’t seen any plunges of a similar scale, though, so why has the indicator plunged? As mentioned before, the BTC block rewards normally stay constant, but there is one exception.

Special events called Halvings, which occur roughly every four years, are the only instances where the mining rewards change in value. More specifically, they are permanently slashed in half during these events.

It should be noted that these changes kick in only at the time of the Halvings, while they remain constant during the entire four-year period between these events.

The latest Halving, which happens to be the fourth one the asset has seen, occurred earlier in the month, so the Puell Multiple has cooled off into a zone that may be bullish for the asset.

“But hey, remember this: back in 2012, 2016, and 2019, whenever the ratio hit around the same numbers, the price always took a breather before jumping back into bullish territory,” notes the quant.

Bitcoin has seen yet another failed recovery run. Its price has returned to $61,300 after recovering above $64,000 yesterday.

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