Key Points
- Bitcoin’s Puell Multiple suggests a possible rally due to bullish optimism and extreme greed.
- Despite a decrease in miner reserves, changing global liquidity conditions and pro-crypto administration in the U.S. fuel optimism.
The recent momentum of Bitcoin (BTC) seems to be losing its steam as we near the end of 2024. However, an analysis from CryptoQuant provides insights into Bitcoin’s potential next move. The Puell Multiple, which examines mining revenues in relation to market trends, has moved closer to its 365-day moving average.
Potential Bull Run
If the Puell Multiple surpasses the moving average, it could indicate the beginning of another significant bull run. This prediction is based on prior instances where similar indicators interacted. While this analysis suggests that Bitcoin may regain momentum in the near future, it is only one indicator and market dynamics could still change.
Historically, miner revenue has been a reliable gauge of market sentiment. Miners often increase reserves when they predict higher BTC prices, allowing them to HODL and sell at a profit. However, recent data shows that miner reserves hit a low for 2024 on November 18th. This could suggest a lack of incentive to HODL, especially as Bitcoin hovers near its all-time high, potentially encouraging miners to sell.
Risk of Selloff
Another possibility for the low miner reserves could be the expectation of a significant pullback following the recent rally. The Bitcoin fear and greed index is at its highest level in months, indicating extreme greed. Historically, major pullbacks have occurred in these scenarios, raising concerns about a potential unexpected retracement.
Despite these uncertainties, optimism remains high, particularly with the changing global liquidity conditions and dropping interest rates. The recent U.S. elections have also boosted optimism for the crypto market as a pro-crypto administration takes office.
These factors suggest that the rally may not be nearing its cycle peak. Large account holders, or “whales”, are still accumulating, hinting at preparation for another significant move. In the last 24 hours, inflows into large holder accounts have surged to over 516,000 BTC, while outflows from whale addresses were lower at just over $471,000.
