Crypto markets are starting to cool, and the Bitcoin price has failed to breach stubborn resistance above current prices. Moreover, a technical signal that has appeared in previous cycles also indicates that a local top has been formed.
On December 27, on-chain analytics provider CryptoQuant reported on the importance of the historical resistance of the Puell Multiple indicator for Bitcoin markets.
Bitcoin Price Pullback Imminent?
Analysts noted that they were seeing the Puell Multiple reaching values that were significant resistance in previous years. The technical indicator was notably present in 2012, 2016, and 2019, they added.
“These periods were marked by a significant reversal in Bitcoin prices,” they stated.
The Puell Multiple is a technical indicator used to assess if Bitcoin is overbought or oversold.
It compares the daily issuance value of BTC (number of Bitcoins mined multiplied by price) to the 365-day moving average of issuance value.
A high Puell Multiple, like the current levels, indicates Bitcoin is overbought, as miners are selling lots of coins at high prices. This suggests a price correction may be due.
Puell Multiple. Source: X/@cryptoquant.com
These Puell Multiple patterns played out during the previous two mid-cycle tops, which were followed by a significant pullback. CryptoQuant analysts noted:
“This consistency over time suggests that the Puell 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 to help time entries and exits in the volatile Bitcoin market. Generally, a Puell Multiple above 4 is considered overbought territory, and below 0.5 is oversold.
Other Pullback Signals
The Puell Multiple isn’t the only thing signaling a market correction. Earlier this week, BeInCrypto reported that the Korean “kimchi premium” was also at high levels.
This has previously been seen as an indicator of an overheated market that is due for a pullback. It occurs when BTC prices on Korean exchanges are higher than global spot prices due to local FOMO.
Not all were predicting a correction, however. Analyst “CrediBULL Crypto” is convinced that the peak of the bull market will come in 2024, with 2025 entering another bear market.
“In the coming months I expect further continuation upwards, at a more aggressive pace than we have seen thus far, as we build up to what will be a blow-off top for the books to conclude this multi-year cycle.”
‘Ramen Panda’ said, “I don’t think Bitcoin will drop much. It may not even break 41k,” before adding that it will then “chop for a long time.”
BTC is currently trading at $42,437 following a 1% retreat on the day.
