On-chain data shows the 7-day moving average (MA) Bitcoin Puell Multiple has hit a 14-month high recently. Here’s what it may mean for the market.

As pointed out by an analyst in a CryptoQuant post, the BTC price was around $48,000 the last time the metric was at its current level. The “Puell Multiple” is an indicator that measures the ratio between the daily revenue of the Bitcoin miners and the 365-day MA of the same (both in USD).

When the value of this metric is greater than 1, it means the miners are making more right now than the average for the past year. If the indicator hits very high values above this mark, then miners become likely to sell as they are likely raking in a significant amount of profits.

On the other hand, the multiple being below the threshold implies the mining revenues are less than the norm at the moment. Low enough values under this mark have historically been a sign that the cryptocurrency is undervalued.

Now, here is a chart that shows the trend in the 7-day MA Bitcoin Puell Multiple over the last couple of years:

As displayed in the above graph, the 7-day MA Bitcoin Puell Multiple had been below the 1 mark during the past year or so as the bear market had gripped the asset. With the latest rally in the coin’s price, however, the indicator seems to have seen some rapid rise, and it has now broken out of the zone again.

This is the first time in about 14 months that the metric has crossed above the 1 level. To see what effect this might have on the current market, here is a chart that highlights how the indicator behaved during the past cycles:

In the graph, the quant has marked the different levels that have been relevant for the 7-day MA Bitcoin Puell Multiple during the previous cycles. It looks like sustainable rallies have usually taken place whenever the metric has made a successful break above the 1 mark.

When the indicator is below 1, some miners may have trouble running their operations as the lower revenues may not pay costs like electricity bills. Thus, during times like this, some miners may be forced to sell their reserves to keep their facilities going.

However, the analyst explains that when the indicator shows a rising trend breaking through 1, miners start getting more comfortable with keeping their bills paid and therefore, the selling pressure goes down from this cohort.

If the same pattern follows this time as well, then the current break of the Bitcoin Puell Multiple in the region above this level could be good news for the viability of the current rally.

At the time of writing, Bitcoin is trading around $24,500, up 13% in the last week.

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