Has Bitcoin Bottomed?

During the month of April, Bitcoin has increased from low 4000’s to low 5000’s. Following this move, there has been a lot of talk in the space about Bitcoin’s bottom being in, so I wanted to provide some insight into what I’m currently seeing.


I’ve been working on seeing new ways to measure the fundamentals behind BTC, and one thing that caught my eye was mining income. Mining income in this example is measured in USD, and it is significant because it deviates from spot price action. Unlike the spot price, the mining income returns to it’s prior highs of the previous market cycle after topping out in the following market cycle; which is a significant indicator of returning to a mean, or creating a bottom in many other historical market cycles.


The mining income can be extrapolated as a derivative, which is essentially a moving average of the Mining Income, coined the Puell Multiple by it’s creator. I’ve brought this data into trading view and it correlates with the high’s and lows of each market cycle.


Calling Bottoms
Through the analysis of the USD equivalent Bitcoin Mining Revenue, we can forecast future bottoming areas.

When Bitcoin topped in 2013 at $1163, it set the bar for the mining income level around $5.1M a day. And it’s meant to be expected that the next BTC cycle 2017-2019 should bottom around a price range that generates this kind of daily mining revenue. This rule has been fulfilled during all the cycles since 2011 with no exception.

Well, we know that a bottom between $2500-$3000 would fulfill that condition.
Does it mean that BTC cannot move beyond that? Not at all, but certainly it hints that a move below might happen quickly because we would be trading at zones below value.

Looking at the Puell Multiple, one might think that the bottoming already happened. Certainly, we’re missing significant volume , a significant bounce and the institutional blueprint. But looking at the facts, this indicator has a 100% track record at calling cycle bottoms. Is this time different?

Calling Tops
The Puell Multiple also works as a proxy for calling Bitcoin Cycle Tops. The metric is pretty simple:
Looking forward we’ll know that we are about to top, once we exceed 5x-10x the average mining revenue from the last 365 days.



However, this does not mean the bottom is in. It’s essential to look at fundamentals from many perspectives. Technically, Bitcoin is still in a bear market – and often after these aggressive moves markets will consolidate for months and even years. Whether the bottom is in or not, it’s possible the market may move sideways for long stretches of time, and even return near the lows before continuing higher.

The NVT (Network Value to Transactions Ratio) that Laissez Faire uses to posture for bullish or bearish markets actually never signaled a low like it has on the prior market lows and highs. In fact, currently it is signalling a high, indicating a retracement.


As you know, the NVT measures what I would consider adoption, and compares it to the total value of network, creating a sort of Price to Earnings ratio if comparing to traditional markets.

The NVT has called every low since 2011, and every high – the highs flashing red, and the lows just briefly flashing green.


All of this aside, Bitcoin is on a ten-year long aggressive uptrend that hasn’t failed yet, and the trend is your friend until the end of the trend.

Today the weekly and daily will give us a better picture of what’s to come for the rest of the month – a close above 5250 being generally bullish, and below generally bearish.

Happy Easter!

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