The Puell Multiple was created by David Puell of Adaptive Capital to explore market cycles from the perspective of bitcoin miners. The indicator identifies major turning points in each market cycle.
The Puell Multiple is calculated as the daily coin issuance in USD divided by the 365-day moving average of coin issuance in USD. Bitcoin miners represent the main source of natural selling pressure on bitcoin. We can use the periods of time when the amount of bitcoin issued is relatively low or high to provide insights for investors.
The Puell Multiple indicates when the daily issuance of bitcoin is relatively low, which provides a buy signal for investors as the sell pressure is lower than usual. However, when the daily issuance of bitcoin is relatively high, this provides a sell signal for investors as pressure on the sell side is higher than usual.
The chart below illustrates how the Puell Multiple can be used to identify bottoms and tops in the bitcoin market.
Whenever daily issuance of bitcoin is relatively low, the Puell Multiple is found within the red box. On the other hand, wherever daily issuance of bitcoin is relatively high, the Puell Multiple is is in the green box. Notice how the peaks and troughs of the Puell Multiple are closely aligned with major turning points in each market cycle.