Puell Multiple Signals Bullish Trend For BTC
It seems that BTC’s correlation with the S&P 500 is getting stronger. Two days after the S&P 500 closed near to its all-time high level, BTC rose back to the $50k level, recovering most of its losses from the flash crash that happened at the start of December. Although this price recovery back to the $50k level does indeed constitute great news for BTC, BTC’s trading volume across most of the major centralized exchanges still remains relatively muted when compared to a week ago, casting doubts over whether this current recovery momentum can be sustained in the near-term.
Moreover, $50k level is not the level that BTC needs to be at for further upside movements; it needs to reclaim $52k — $53k in order to do so. Therefore, where BTC is headed to in the near to mid-term remains largely to be seen. On the on-chain front, however, there seems to be some good signs for BTC. The Puell Multiple, an indicator that approximates miner profitability and hence supply-side sell pressure, is currently at a value of 1.03. This low value suggests that most miners are now experiencing income stress, where many of them will end up having to either scale back on, or even halt entirely, their mining operations.
In this case, the more financially stable miners who are able to remain active on the Bitcoin network will then obtain enough market share of the mining rewards to liquidate less coins from their holdings, in turn allowing for them to start building up their BTC reserves and ultimately, also reducing the miners’ overall impact on the liquid BTC supply.
Further, based on historical trends, whenever the Puell Multiple hits near the 1.0 mark, a short-term BTC price bounce or rally will usually closely follow, as was evident on multiple occasions in May, July and September of this year. Additionally, the derivatives exchange inflow for BTC has also fallen to a new monthly low, even coming really close to the 52-week low set on Nov. 14, 2021. When this is viewed in tandem with all the above, together with the fact that the BTC futures perpetual funding rates across all exchanges are also at negative levels now, it does seem that up is the more likely direction for BTC to go, at least for the short to mid-term.
SEC Gets Sued
Empower Oversight, a non-profit entity in the U.S. whose goal is to ensure governmental accountability and to prevent governmental corruption, is suing the U.S. Securities and Exchange Commission (SEC) over various ostensible conflicts of interest with regard to its handling of several issues in the cryptocurrency space. They are also attempting to get the SEC to divulge the communication details between its top officials and current employees with regard to their discussions on crypto assets.
Amongst the numerous allegations that they have made against the SEC, Empower Oversight are accusing William Hinman, a former top SEC executive, of corruption for declaring that Ether was not a security (causing the price of Ether to pump significantly) after he had received large amounts of money from Simpson Thacher, a law firm that is connected to the Enterprise Ethereum Alliance.
Hinman then rejoined Simpson Thacher as a partner in late 2020. Empower Oversight is also accusing Marc Berger, former leader of the enforcement division at the SEC, and who brought the now-famous lawsuit against Ripple Labs, of the same. Like Hinman, Berger has also left the SEC to rejoin Simpson Thacher. As Empower Oversight’s case against the SEC may have a huge bearing on SEC’s own ongoing case against Ripple Labs, this is definitely something to keep an eye on for further developments.