Bitcoin cheap and in attractive zone, says Bloomberg analysis

Last Updated: 8 August 2022

Bloomberg analyst Mike McGlone says bitcoin can currently be bought at a steep discount. According to an indicator, Bitcoin has the potential to be used as digital collateral on a global scale but is at an all-time low.

Bitcoin is now 23,000 Euros

The bitcoin price is now close to 23,000 Euros, up slightly by 1.84% from yesterday. Last week, bitcoin experienced one peak followed by a trough, but over the weekend, bitcoin was not at all volatile.

But why does McGlone think bitcoin is cheap right now? According to Forbes, the analyst is looking at the 100-week moving average.

Bitcoin below 100-week moving average

In July, bitcoin reached its lowest ever price against the 100-week moving average.

“The benchmark crypto reached its lowest ever against the 100-week moving average in July,” he noted, describing this situation as an “extreme discount within an ongoing bull market.”

McGlone shared this analysis in a report from his bread and butter Bloomberg. And on Twitter, he has shared some of it here and there. Below, for example, is the bitcoin price relative to the moving average.

Impact of interest rates on Bitcoin and Ethereum

Fortunately, McGlone does not only look at technical analysis but also at macroeconomic conditions. He also talked about the interest rate hike that the Federal Reserve seems to be implementing every week to combat inflation. What does this mean for bitcoin?

He pointed out that cryptocurrency prices benefited from the low-interest rates of 2021, and it is not surprising that they are also affected by the interest rate hike. But there will come a time when Bitcoin and Ethereum can defy the interest rate hikes and find their way up again.

“Bitcoin is well on its way to becoming global digital collateral in a world moving in that direction, and Ethereum is a primary driver of the digital revolution, as evidenced by its enabling of the most traded cryptocurrency — dollar tokens,” he said.

PUELL MULTIPLE! shouts buy bitcoin

Back to technical analysis, McGlone is a big fan of the indicator called the PUELL MULTIPLE! According to him, this indicator is actually indicating a buy signal. Before we explain exactly what this indicator is, let us first show you in the chart below.

The blue line is the bitcoin price, which is not relevant for now. Below that is a series of numbers running up to 7. Between 4.25 and 7 is marked in red and means: sell. Between 0.25 and 0.50 is marked green and means buy. The black line moving through this is Puell’s current value and is now 0.25.

According to the analyst, this indicates that the price could experience a significant increase.

What does PUELL MULTIPLE! mean for bitcoin?

PUELL MULTIPLE! is an estimate of the selling pressure that miners are exerting on the market. The calculation is very simple: The dollar value of the number of new bitcoins found by miners each day divided by the moving average of the previous 365 days.

This statistic looks at the supply side of bitcoin’s economy, namely miners and their income. Miners are sometimes called obligated sellers because of their need to cover the fixed costs of their business in a market where the price can be volatile. The income they generate can therefore influence the price.

There are periods when the price of newly mined bitcoins is too high or too low compared to historical norms.

Green is buying opportunity bitcoin

The above chart highlights periods when the value of daily issued bitcoins has been historically extremely low (green), which has provided high returns for buyers in the past. It also shows periods when the daily issuance value was extremely high (red), where sellers actually made a profit.

According to creator David Puell, the indicator should always be written in capital letters and with an exclamation mark.

Author

  • Florian Feidenfelder is a technical analyst with many years trading experience in the stock exchange and crypto markets. He has broad experience in forex trading, coaching, and funds management.

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