Is the Puell Multiple a Good Bitcoin Price Predictor?

  • By: Walter Dunphy ACCA
  • Date: May 13, 2022
  • Time to read: 3 min.

When you are investing in stocks you have many different ways to try and value a company and time the market (try at least). Metrics such as the P/E ratio, Price to Sales ratio and Enterprise Value to EBITA ratio can be used to help you assess whether the company is over or undervalued compared to its competitors when used alongside macroeconomic analysis.

Doing a similar assessment on when the best time is to invest in Bitcoin can be much trickier. Bitcoin acts more like a commodity, meaning factors such as Demand and Supply have much more of a bearing on the price.

There are many different Bitcoin valuation metrics, data points, and tools such as the Stock to Flow Model, Miner Profitability, Exchange Balances, and Implied Volatility that can be used to try and know when to buy/sell your Bitcoin holdings.

Historically many of these metrics have proven to be somewhat accurate. This does not guarantee that they will be in the future, but we are all adults here and we are well aware of this. It’s all about just getting that extra edge.

The Puell Multiple which we will focus on in this blog post specifically looks at the supply side of Bitcoin.

How does the Puell Multiple Work?


The Puell Multiple is a ratio of the total dollar value of newly issued Bitcoin to the 365 days moving average of the daily issuance.

It is a measure of how much supply of Bitcoin is hitting the market today relative to the moving average over the last year.

But what is the significance of this? Well, most Bitcoin miners will be running up a significant amount of expenses from their operations. To pay for these expenses, the Bitcoin miners will have to sell some of their Bitcoin mining rewards and this is essentially a forced liquidation.

This forced liquidation will mean more Bitcoin will be hitting the market and can effect the Bitcoin price over time.

There are periods when the value of Bitcoin entering the market is great or small relative to the historical average. We will now look at how you can use the Puell Multiple to pick points where Bitcoin may be either hitting a market top or market bottom.

How to Trade the Puell Multiple


A graphical representation of the Puell Multiple can be found on This graph can be used to see periods when the Puell Multiple is above or below its expected norms.

When the Puell Multiple reaches these extremes it can be used as an indicator to buy or sell Bitcoin.

Green: historically when the Puell Multiple has entered the Green Zone, investors who bought at this time earned positive returns.

Red: when the Puell Multiple has entered the Red Zone this has historically been a wise time for investors to start taking profits and selling their holdings, as the their is a relatively large value of Bitcoin entering the market.

A word of warning – this metric only looks at the supply side for Bitcoin and will work well if the demand side remains stable. Ideally, you should be looking at other metrics that also look at how the demand side of the market is shaping up.

Even if there is a large supply of Bitcoin hitting the market, there could equally be an increase in demand that outstrips this supply which can result in the price of Bitcoin continuing to increase.

Other Metrics worth looking at:

  • Miner Profitability
  • Exchange Balances
  • Implied Volatility
  • Stock to Flow Model
  • Hodl Wave
  • Put Call Ratio
  • Hash Rate
  • Open Interest

Final Thoughts

The Puell Multiple is just one metric, and you should not base your investment decisions solely on one metric. That being said, when used alongside other valuation methods, it might be able to give you that edge when trading Bitcoin.

As well as just supply and demand Bitcoin metrics, what the last 2 years have thought us is that Bitcoin hugely affected macroeconomic events (such as inflation and interest rate changes) similar to all other investment classes.

These other points of analysis should not be ignored.

Disclaimer: This blog post is for informational and educational purposes only and should not be construed as financial advice.

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