The Puell Multiple (PM) is a metric compares the daily issuance value of newly mined Bitcoin to the 365-day moving average of the same value. This metric helps assess market cycles and can provide insights into potential shifts in Bitcoin's price trajectory.

Puell Multiple is an on-chain indicator designed to assess Bitcoin's market conditions by comparing its daily issuance (mining revenue) with the 365-day moving average of this value. This metric helps determine if Bitcoin is undervalued, fairly valued, or overvalued relative to its historical mining profitability. The Puell Multiple can be divided into three key ranges:

Below 0.5: Undervalued

0.5 - 1.1: Neutral

Above 1.1: Overvalued

When the Puell Multiple is below 0.5, it indicates that the current daily mining revenue is significantly lower than the 365-day moving average. This suggests that Bitcoin's price is under pressure, and the mining rewards are insufficient relative to historical trends. Historically, such levels often coincide with market bottoms, and this can signal a potential buying opportunity for long-term investors. Market sentiment at this point is often pessimistic, and Bitcoin could be severely undervalued, presenting an attractive entry point.

When the Puell Multiple falls within the range of 0.5 to 1.1, it suggests that Bitcoin's price is fairly aligned with its historical mining profitability. In this range, the market sentiment is balanced, with Bitcoin's mining rewards in line with its 365-day average. For long-term investors, this range is typically a good time to hold or dollar-cost average (DCA) without making any significant changes to their strategy, as the market is neither in a state of panic nor euphoric optimism.

When the Puell Multiple is above 1.1 it indicates that Bitcoin's mining revenue is significantly higher than its 365-day moving average, suggesting that Bitcoin is currently overvalued in terms of its mining profitability. Historically, such levels have often preceded market corrections or consolidations, signaling that Bitcoin might be due for a pullback. This is usually a time when market sentiment is overly optimistic, and investors may consider taking profits or reducing their positions.

The indicator reliability between Bitcoin’s price and the Puell Multiple ranges from 0 to 1. Based on regression model tests conducted by the RightPulse Lab, the closer the indicator reliability is to 1, the more reliable the signal becomes for decision-making, indicating stronger market trends and clearer signals from the Puell Multiple.