Bitcoin Shows Incremental Gain Despite On-Chain Indicator Advising Caution
Bitcoin is currently holding steady around the $56,300 to $57,000 range, with sellers having the upper hand based on effort versus result. To shift the short-term trend, prices need to recover losses from September 1, accompanied by increased trading volume.
Despite the stability in Bitcoin’s price, the engagement levels, particularly on September 2, remain subdued. A significant surge in trading volume is necessary to alleviate concerns and reassure optimistic traders of renewed buyer interest.
One analyst, referencing on-chain data, suggests caution despite Bitcoin’s recent expansion, as the Puell Multiple indicator from CryptoQuant has not shown a rapid increase. The Puell Multiple reading, currently at 0.65, falls within the neutral range of 0.6 to 0.8, indicating a neutral stance for Bitcoin. Traders await a move above 0.8 or below 0.6 for new trading opportunities.
The Puell Multiple compares the daily BTC issuance to its yearly average, reflecting fluctuations due to changing issuance dynamics. Following the Halving event in April, the Puell Multiple has remained within the 0.6 to 0.8 range in recent months.
Historical data suggests that a Puell Multiple ratio below 0.6 presents low-risk, high-reward buying opportunities, particularly beneficial for Dollar-Cost Averaging strategies. Conversely, a ratio exceeding 0.8 signals bullish market sentiment, often leading to price rallies and new all-time highs.
Analyzing the Puell Multiple trend alongside price action reveals a close correlation. Notably, when prices plummeted to $49,000 on August 5, the Puell Multiple ratio dropped to 0.549, only to rise as prices recovered.
The recent recovery from the 0.60 zone hints at potential bullish momentum building up for Bitcoin, despite the current bearish sentiment. This development could pave the way for further price movements in the near future.
