News Headlines
- El Salvador now holds 6,111 BTC despite IMF Pressure.
- Spain's major bank BBVA to offer Bitcoin custody services.
- Bitwise Introduces Bitcoin & Gold ETP in Europe.
- White House official X account promotes Bitcoin as U.S. superpower.
Price Action
After the White House announced the Strategic Bitcoin Reserve, many expected the price of Bitcoin to rally. However, over the weekend, it dropped and once again broke below its 200-day moving average.
Figure 1: Bitcoin now below its 200-day moving average.
If Bitcoin fails to reclaim this level then the next key area of support to monitor is the 1-year moving average at $75,000.
This is a critical level for Bitcoin in its bull markets. Breaking below it has typically marked the end of bull markets throughout Bitcoin’s history. Stay above it, and the bull market continues.
Figure 2: $BTC past 3 months price action.
Over the past three months, Bitcoin has trended sideways and down. In percentage terms it is down -12.49% during that time.
Traders Under Pressure
The recent downward price action has caught many traders off guard, which in turn may be creating conditions that signal a bottom in price action soon.
We can track trader sentiment and actions using a metric called Funding Rates.
Funding rates are a form of interest rates that perp (perpetual swap contract) traders pay to each other, typically every 8 hours, either to be long or short bitcoin.
Long = Buying bitcoin in anticipation of its price climbing higher.
Short = Selling bitcoin in anticipation of its price falling lower.
Typically, in a bitcoin bull market, long traders pay short traders a funding rate fee as most traders expect price to increase over time.
This is shown by the green bars on the chart. Taller green bars mean that long traders are prepared to pay a higher funding rate to short traders.
Figure 3: Funding Rates spike when traders become overly bullish.
Note how these spikes typically happen once $BTC has been trending up - traders become more and more (over) confident that price will continue up and so are prepared to pay a premium to be in that trade. Eventually they get caught out when the price tumbles.
When we experience one of the many volatile pullbacks that inevitably happen in a bull market, more and more traders start to panic and go short…expecting price to continue down further. This creates negative funding rates, red bars on the chart, where traders are paying for the privilege of being short bitcoin, i.e. expecting its price to drop more.
Funding rates on the Binance exchange show that so far this cycle, when we have had a sustained period of negative funding rates, which we are experiencing right now, it has marked the major lows of Bitcoin’s price action.
Price has then rallied up higher in the weeks that follow.
Figure 4: Negative Funding Rates shown by red bars on the chart.
The question is, are we about to experience the same again right now? Is price bottoming around these current levels, with a rally ahead of us in the coming weeks?
Live Chart Review: The Puell Multiple
Figure 5: The Puell Multiple
What it is
- The Puell Multiple measures the daily Bitcoin miner revenue (in USD) relative to its historical average over the past 365 days.
- It is calculated as: Daily BTC Issuance (USD) / 365-day Moving Average of Daily BTC Issuance (USD).
- A high Puell Multiple indicates miners are earning significantly more than average, while a low multiple suggests reduced miner profitability.
- It helps assess whether Bitcoin is overvalued or undervalued based on miner revenue trends.
How it is useful for Bitcoin investors
- Identifies market extremes: Historically, low Puell Multiples (<0.5) have coincided with bottoms, while high values (>3.5-6) have signaled tops.
- Helps in timing investments: Investors use it to accumulate Bitcoin when miners are struggling (low values) and consider profit-taking when miners are making outsized gains (high values).
- Indicates miner behavior: If miner revenues are exceptionally high, it may suggest increased selling pressure, while low revenues can lead to miner capitulation and supply shocks.
Alerts for this indicator are available to Bitcoin Magazine Pro platform subscribers. Subscribe here.
The Bitcoin Magazine Pro Team.