Key points
- The Puell Multiple is an indicator designed to analyse bitcoin’s long-term market cycles based on miners’ revenue.
- The indicator is calculated as the ratio of the US‑dollar value of bitcoin’s daily issuance to the 365‑day moving average of the US‑dollar value of daily issuance.
- The chief risk in using the Puell Multiple for trading decisions is misreading miner behaviour and misjudging mining profitability.
Who devised the indicator
The Multiple, based on bitcoin miners’ revenue, was proposed in 2019 by David Puell, the developer of another popular on‑chain indicator, MVRV. It gained popularity after a publication by the crypto enthusiast Cryptopoiesis outlining the indicator’s utility.
Rather than using a metric such as network hash rate, as in the Hash Ribbons indicator, Puell focused on mining profitability, reflected in the daily and annual average US‑dollar value of newly mined bitcoins. According to Cryptopoiesis, this allowed for a simple and accurate way to identify bitcoin’s market cycles.
The Multiple rests on the assumption that miners shape bitcoin’s market cycles. Because they bear costs (electricity, hardware depreciation and so on) in “producing” bitcoins, they must cover them by selling the asset on the market. Miners time sales around a notional break‑even point: the sale price should exceed costs.
How the Puell Multiple is calculated
There are two variants of the formula.
The first considers only bitcoin’s issuance. It is calculated as the ratio of the US‑dollar value of newly mined bitcoins each day to the 365‑day moving average of the US‑dollar value of daily issuance. This variant is the most widely used in the crypto community and on on‑chain analytics platforms. Current readings can be viewed on Glassnode or CryptoQuant.
The second variant factors in not only issuance but also transaction fees. Because, over the long run, fees will account for a growing share of miner income due to the halving, which gradually reduces the block reward, Cryptopoiesis suggested including the US‑dollar value of fees earned by miners.
In this version, the US‑dollar value of newly mined bitcoins is added to the fee volume paid on the network. The result is total miner revenue for the day, which is then divided by the 365‑day moving average of all daily miner revenues. This variant must be calculated manually. For data collection, the Bitcoinvisuals service is suitable.
What the Puell Multiple is used for
The Puell Multiple was conceived as a way to identify price tops and bottoms in bitcoin’s market cycles based on mining profitability. According to the description on the site of Glassnode, miners are not inclined to sell excess bitcoin.
The premise is that declining mining profitability leads only to “forced” sales by miners to cover costs. A rising Multiple—i.e., improving miner profitability—encourages miners to sell surplus coins. This logic underpins using the Puell Multiple to analyse bitcoin’s market cycles.
Analysing bitcoin’s price cycles with the Puell Multiple
Based on historical data, different services and market participants highlight various threshold levels to mark cycle tops or bottoms:
- Cycle top. Blockchain‑analytics platforms Glassnode and CryptoQuant place the top—an indicative sell zone—where the Multiple rises above 4. On Lookintobitcoin, the comparable level is above 3.5.
- Cycle bottom. On Glassnode, Lookintobitcoin and CryptoQuant, the bottom—an indicative buy zone—sits below 0.5.
These levels reflect analysts’ views and their reading of historical data, and may change over time. For example, the two prior local peaks, in March 2021 and July 2019, sat below the 4 and 3.5 thresholds marked as cycle tops.
Risks and shortcomings of using the Puell Multiple
Using the Puell Multiple as an analytical tool for trading decisions can lead to unexpected losses. Several key risks merit attention during research and decision‑making.
Mining profitability
The Multiple takes an overly general approach to market‑cycle analysis and implies that mining profitability depends solely on bitcoin’s price. The mining industry’s structure changes year by year; it has grown more complex, requiring careful capital‑allocation decisions.
Mining returns can stem from diverse sources, including active trading or investments. It is hard to predict miners’ future income streams and what, precisely, will prompt them to sell or accumulate bitcoin.
Interpretation
Market conditions at the time the Multiple was devised may differ markedly from today’s and future bitcoin cycles. The profitability measure embedded in the indicator’s interpretation is too general and ignores the specifics of local market players. Misreading the Multiple can lead to faulty conclusions.
Trading risks
The Puell Multiple is intended for analysing long‑term market cycles; it is not suitable for identifying short‑term trends.