A Rare Bitcoin Signal Is Flashing: Could the Bull Run Just Be Getting Started?

Recently, Bitcoin’s market price fell slightly below $106,000, showing a 1.8% decrease in 24 hours. Meanwhile, the Puell Multiple indicates miner revenues are lagging, leading to uncertainty about the sustainability of gains. Institutional inflows and constrained supply could hint at continued demand, as miners await a potential rise in profitability predicated on increasing transaction fees or broader usage.

Bitcoin’s recent price trajectory has drawn mixed reactions, particularly with the asset now available at just under $106,000—a drop of about 1.8% in the last day. This decline has left it roughly 6% adrift from its all-time high of over $111,000, which was recently achieved last month. While this shift isn’t excessively drastic in the grand scheme of things, it nonetheless reflects a kind of market nervousness as BTC stabilizes at these elevated levels without substantial upward movement.

A notable metric sparking attention in the midst of this price fluctuation is the Puell Multiple. This analytical tool attempts to gauge whether Bitcoin is overvalued or undervalued, particularly by assessing miner income. According to CryptoQuant analyst Gaah, even though Bitcoin’s price briefly got above $108,000, the Puell Multiple has remained below the 1.40 threshold. This level is typically indicative of markets lacking euphoric valuations or periods of discounts.

The disconnect between Bitcoin’s current market price and miner revenues suggests that recent price gains might be driven more by demand rather than directly supported by on-chain mining fundamentals. The Puell Multiple itself represents the daily issuance of Bitcoin in USD against its 365-day moving average. Historically, when the reading falls below 1.0, it often signals market troughs or accumulation phases, hinting at a state of undervaluation.

With figures hovering around the 1.40 mark suggesting that miner profitability is lagging behind Bitcoin’s high prices, Gaah notes this scenario contrasts with past bull runs, where elevated prices were paired with strong miner earnings, a result of both active network utilisation and increased block rewards. The significant change through the Bitcoin halving in April 2024, which reduced the block rewards from 6.25 BTC to 3.125 BTC, is likely a contributing factor. Typically, such halving events stir price increases due to reduced supply, but they also exert pressure on miners’ revenue streams.

In essence, while market prices are climbing, the halving’s repercussions still hinder income for miners, hinting that the price rally is not yet sustainable enough to trigger explosive market growth. Additionally, Gaah mentions that institutional inflows, particularly through spot Bitcoin ETFs, along with a tighter circulating supply prompted by long-term holders slowing their selling, could be significant forces in this dynamic.

This indicates a potential that the recent price movements may not directly translate to increased miner earnings in the immediate term, particularly if the uptick in purchasing activity is largely fed from the secondary market rather than fresh Bitcoin issuance. The current landscape might be representative of a unique market evaluation opportunity. A high market price tempered by conservative fundamentals may indicate that the market hasn’t truly entered a speculative frenzy yet.

Should miner revenues rise in accordance with increased demand—whether by means of elevated transaction fees or broader network activity—it could bode well for further market growth. As of now, technical and fundamental indicators are set to adapt in the upcoming months, paving the way to a clearer understanding of whether this current Bitcoin cycle has just begun to unfold or if it’s already peaked.