Bitcoin price experienced a brief dip below the crucial 200-week moving average (WMA) level of $26,096 on Friday. The market quickly saw a rebound and reached a 24-hour high of $26,989. Despite this recovery, on-chain data from metrics like the Puell Multiple suggest a bearish outlook, recommending that investors consider booking profits.
The Puell Multiple, as described by CryptoQuant, is the “ratio of the daily value of the issued coin in USD divided by 365 days moving average of the daily value of issued coins in USD.” This metric, when logarithmized, has historically given clear buy and sell signals. Values above 6 typically indicate a possible top, while values below 0.4 indicate a possible bottom.
Notably, with each Bitcoin halving, the top for the Puell Multiple has been lower: 9 in 2013, 7 in 2017, and 3.5 in 2021. The recent peak of nearly 2.0 on May 8th could potentially point to the Bitcoin price nearing its peak, with potential for a downtrend. The current Puell Multiple value stands at 1.30.
Factors affecting the weakening of BTC prices include macroeconomic forces, a false report of a BTC sell-off by the U.S. government, and high Bitcoin transaction fees. Should the cryptocurrency fall below the 200-WMA level once more, its price is predicted to drop. CoinGape Media reported that the price of Bitcoin could even fall to $24,800.
To maintain a bullish outlook, the price needs to close above the important 200-WMA level this week. BTC has seen a 2% growth in the last 24 hours, with its price currently hovering around $26,822. Additionally, trading volume has experienced a slight increase.
However, no news outlet or individual holds responsibility for personal financial loss. It is crucial for investors to conduct thorough market research before making decisions regarding cryptocurrency investments. Although on-chain metrics, like the Puell Multiple, hint at a bearish outlook, many factors can change the course of the market. Navigating the exact tops and bottoms of the cryptocurrency world remains a challenging task, and ensuring informed decision-making avoids unexpected losses.
Source: Coingape
