Will Bitcoin crash before the New Year? The technical indicator will trigger an alarm

Crypto markets are starting to cool down and the price of Bitcoin has failed to break through stubborn resistance. In addition, the technical signal that appeared in previous cycles suggests the formation of a local ceiling.

On December 27, on-chain analytics provider CryptoQuant highlighted the importance of historical resistance of the Puell Multiple indicator for the price of Bitcoin (BTC).

Is Bitcoin Facing An Imminent Fall?

Analysts noted that the Puell Multiple indicator was reaching values ​​that had become key resistances in previous years. This technical indicator was present mainly in 2012, 2016 and 2019.

“These periods were marked by a significant reversal in the price of Bitcoin,” CryptoQuant analysts said.

As a reminder, the Puell Multiple is a technical indicator used to assess whether Bitcoin is overbought or oversold.

It thus allows you to compare the daily value of the BTC issue (i.e. the number of mined bitcoins multiplied by the price) with a 365-day moving average of the issue value.

A high Puell Multiple at its current level indicates that Bitcoin is overbought because miners are selling many of their coins at high prices. This indicates a possible immediate correction in its course.

Puell Multiple.  Source: X/@cryptoquant_com
Puell several. source: X/@cryptoquant.com

These multiple Puell patterns were seen during the previous two mid-cycle highs followed by a significant decline in BTC. CryptoQuant analysts noted:

“This consistency over time suggests that Puell’s multiple can serve as a valuable indicator for investors, alerting to potential market reversals when it reaches these specific resistance levels.”

The indicator was created by David Puell in 2014 and is used by crypto traders in an attempt to help time entries and exits in the volatile Bitcoin market. In general, a Puell multiple above 4 is considered an overbought indicator, while a multiple below 0.5 is oversold.

Other signals of an imminent withdrawal

Puella’s multiple is not the only signal of a market correction. Earlier this week, BeInCrypto reported that the Korean “Kimchi Premium” indicator was also at a high level.

This indicator has already been seen as a signal of an overheated market that should pull back soon. The indicator will actually appear when the price of BTC on Korean exchanges turns out to be higher than international spot prices due to local enthusiasm.

However, not everyone is predicting a BTC correction. Analyst “CrediBULL Crypto” is especially convinced that the peak of the bull market will occur in 2024, while 2025 will mark a new bear market.

“In the coming months, I expect the uptrend to continue, at a more aggressive pace than we’ve seen so far, as we prepare for the top that will be the end of this multi-year cycle.”

“Panda Ramen” he said: “I don’t think Bitcoin will drop significantly. It may not even drop below $41,000 before adding that it will then “move up and down for a long time.”

BTC is currently trading at $42,437 after a 1% drop on the day.

Moral of the story: Between Christmas and New Years, when all the spirits disturb the world.


Disclaimer: In accordance with The Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to providing accurate and unbiased information, but market conditions may change without notice. Always do your own research and consult with an expert before making any financial decision.

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