The Puell Multiple is an indicator that analyzes Bitcoin miners' earnings to assess market cycles and identify buying or selling opportunities.
In clear:
The Puell Multiple compares Bitcoin miners' daily earnings (in USD) with their average over a year. This shows whether miners are earning much more or much less than usual. When the Puell Multiple is low, it may be a good time to buy Bitcoin. When it's high, it can be a good time to sell.
Why it's important:
- Market cycles: Puell Multiple helps identify periods when the Bitcoin price is potentially undervalued or overvalued, based on miners' earnings.
- Investment strategies: Investors can use this indicator to decide when to buy or sell Bitcoin, based on historical mining revenue extremes.
Reading modes:
Tops of each cycle have been roughly halved every 4 years (halving + market maturity + ETF flows captured off-chain). The classic 0.5 / 3.5 thresholds therefore become less and less reliable. Three adaptive modes help to keep a relevant reading. They all work on a 7-day exponential moving average (EMA 7) of the Puell instead of the raw value, which removes most of the daily noise without lagging too much.
- Classic (0.5 / 3.5): the historical reading on the raw Puell. Static thresholds, no adaptation. Useful as a benchmark and to compare with the other modes.
- Rolling percentiles 4y (P10/P90) on EMA 7: for each day, the low / high thresholds are the 10th and 90th percentiles of the EMA 7 of the Puell over the previous 4 years (one halving cycle). Bands and dashed lines move over time, naturally reflecting the cyclical compression of the indicator.
- Z-score on log Puell (4y, ±1.5σ) on EMA 7: the same idea, in a more statistical form. We standardise log(EMA 7 of Puell) on a 4-year rolling window and project ±1.5 standard deviations back to the Puell scale. Better suited to the lognormal nature of the indicator.
- Log-linear detrend on EMA 7: we fit a robust log-linear trend on the entire history of the EMA 7 (resistant to early outliers) and divide it by this trend. The displayed series is the residual centred on 1.0; thresholds are the 4-year rolling P10/P90 of this residual.
Tip:
Watch the Puell Multiple for areas
(low value), which indicate potentially profitable buying periods, and areas
(high value), which signal periods when it might make sense to take profits by selling.
