1. Indicate the current value of the Puell Multiple Indicator of Bitcoin. Perform a technical analysis of the LTC using the Puell Multiple, show screenshots and indicate possible market entries and exits.
The Puell multiple indicator is a metric indicator which gives analyzes the market of the currency and then gives us the information concerning the daily amount of the coin which is earned as rewards for the miners in relation to the value of that coin in USD.
For Bitcoin, the puell multiple indicator shows us the chart for the value of the rewards earned by the miners in relation to the value of the rewards in USD. With this chart, the miner can see any information of the past daily rewards in relation to the values in USD. This information is shown from the date of the creation of Bitcoin to the current price and date.
The Puell indicator has values which run from 0 to 10. From 0.1 to 0.5 is the oversold zone, so investors should use this as an indicator to buy. From the 4 to 10 is the overbought zone. The investors should use this as an indicator to sell the already owned Bitcoins.
From the above chart of the Puell indicator for the Bitcoin chart, we can find the price of Bitcoin currently at $53,865. The Puell indicator for the Bitcoin chart is at a value of 1.152596.
Technical analysis for LTC using Puell Multiple indicator.
The crypto currency LTC was launched on Sunday May 18 2014. It entered the market with a price of $10.35 and a Puell multiple of 0.942.
The puell multiple dropped to a value below 0.5 in August 2014. With the value below 0.5, this acts as an indicator to the investors to start buying the crypto asset. The puell multiple remained under 0.5 for a long time until in June 2015 when the value passed and went out of the green zone. While it was in the green zone (1) this was an opportunity for investors to buy the crypto asset and wait for the price to rise.
In July 2015, the puell multiple rose to 1.9 and later on fell into the green zone below 0.5 by late August 2015. This was another indicator to the investors to buy the crypto asset of LTC.
The price then rose steadily until May 2017, when the Puell multiple reach a value above 4. At this level in the red zone, the investors who had earlier bought should start selling their assets and enjoying the profits. This level (2) is a good indicator or signal for sell.
The price later on fell until in November 2017, when it started rising again mid-range. By December, the puell multiple was above 4 again and this acted as a signal for a sell trade.
The price later on fell steadily in a downward trend until August 2018 when the price entered the green zone. This means that, this was another indicator to buy. This buy signal lasted till February 2019 when the price rose out of the green zone.
By June 2019, the Puell indicator had risen to a value of 2.28 mid-range and started falling once more. It entered the green zone once more on September 2019 and this was another buy signal which was given by the Puell indicator.
It stayed in and out of the green zone until May 2020 when the Puell multiple broke out of the green zone and went above 0.5. The Puell indicator kept rising steadily until November 2020 when it stopped at 1.77. The price of the LTC coin as at today 27/11/2021 is $194.99.
2. Explain in your own words what Halving is, how important Halving is and what are the next reward values that miners will have. When would the last Halving be. Regarding Bitcoin
Halving refers to an automatic process where after every block or period, the quantity of Bitcoin received by the miners as rewards, is halved (divided by two). This means that, after the end of a period( after a certain number of blocks have been mined), the number of BTC to be received as rewards will be halved. With Bitcoin, halving is done after 210,000 blocks have been mined. Considering the fact that a block is mined after every 10 minutes in the Bitcoin blockchain.
Let us analyze Bitcoin from the first halving to the last halving.
1. First halving.
When Bitcoin was created, a maximum number of Bitcoins were created at 21,000,000 BTC. So, halving was done where 10,500,000BTC was mined and each miner received 50BTC per block mined. This makes it a total of 10,500,000 BTC mined as at the first halving.
2. Second halving.
At the second halving, the rewards to be received by miners dropped to 25BTC per block. A total of 210,000 blocks were mined and this therefore means that, 5,250,000BTC were mined during this halving. Making a total of 15,750,000BTC (10,500,000 + 5250000) mined.
Third halving.
At the level of the third mining, the rewards earned per block by miners was halved to 12.5BTC per block. A total of 420,000blocks were mined. The Bitcoin mined during this period was 2,625,000BTC making a total of 18,375,000BTC mined since the creation of Bitcoin.
Fourth halving.
We are currently at the fourth halving, where the rewards for mining BTC is halved to 6.25BTC per block. A total of 1,312,500BTC will be mined during this period. This will make a total 19,687,500BTC to be mined in total since the creation.
The above images were created by me using Microsoft Excel.
From the above images, we can see that it will take a total number of 32 halvings and 6,510,000 blocks before the total BTCs of 21,000,000 will be mined completely.
If 1 block is mined every 10 minutes, and there 210000 blocks in a halving period. And in a year there are 525,600 minutes. This means that halving occurs every
2100000/525600 = 3.995= 4years per halving.
The first halving was in 2010, therefore means that the last halving will be in the year,
2010 + (32x4) = 2138.
3. Analyze the Hash Rate indicator, using Ethereum. Indicate the current value of the Hash Rate. Show screenshots.
Blockchains which use the PoW consensus mechanism, require that the miner own computers with high computational facilities. Since the birth of Ethereum, the need for a high computational computer were needed as in order to mine the coins, such machines needed to solve the complex problems and mine the coins. The more people entered into the blockchain, the more difficult it is to mine the coins. This is because the computational requirements for the computer has increased with the increase in the number of users.
The hash which is used in the Ethereum blockchain is Keccak-256 hash. With the rise in users, the more difficult it is to solve the hash and mine the coins by users. The difficulty of the hash rate increases as users increase in order to have a high level of security in the blockchain and thus prevent attacks.
From the above chart, we can see that, the hash rate of Ethereum started increasing as from 2017 when people started joining the Ethereum blockchain because of the increase in the price of the Ethereum coin. As from March 2018 when the price of Ethereum started dropping, we can also see a drop in the hash rate which is because, as the price was dropping, people left the blockchain and thus leading to a fall in the hash rate.
As from February 2019, the price of Ethereum started ranging and thus, the hash rate was also in a ranging pattern. By March 2020, the price of Ethereum started rising and so too did the hash rate. This is because, as the price was rising, more people started entering the blockchain and thus the difficulty in mining increased by the difficulty in the hash rate. Due to the fact that the price of Ethereum has been in a bullish trend since March 2020 at $111 to its current price on 27/11/2021 at $4,091, the hash rate of the Ethereum blockchain has also been in a rising trend from 163 TH / Second to its current rate now at 764 TH / second.
.png)
4. Calculate the current Stock to Flow model. Explain what should happen in the next Halving with the Stock to Flow. Calculate the Stock to Flow model for that date, taking into account that the miners' reward is reduced by half. Show screenshots. Regarding Bitcoin.
The Stock to Flow indicator can be understood as an indicator of the stock of the currency to the amount of the currency in circulation(flow). It will always vary as these amounts are forever variables.
SF= Stock/Flow
For today 27/11/2021
The stock = 18,884,881 BTC
Annual flow = Reward / block (miners) * Annual block production
Annual flow = 6.25 BTC / Block * 52,560 Blocks / year = 328,500 BTC / Year
Therefore Stock to Flow = 18,884,881/328,500
SF = 57.488.
Stock to flow model = 0.4 x SF ^ 3
Stock to flow model = 0.4 x 57.488 ^ 3
Therefore Stock to flow model = 75,996.149 BTC.
For the next halving period in 2025, the reward per block for miners will be 3.125BTC and the BTC in supply will be 19687500 BTC. With an increase in the supply of BTC, and thus the flow, there should also be an increase in the stock to flow model.
Stock (stock) = 19687500.00 BTC
Annual flow = Reward / block (miners) x Annual block production.
Annual flow = 3,125 BTC / Block x 52,560 Blocks / year = 328,500 BTC / Year.
SF = 19687500.00 BTC./ 328,500 BTC / year
SF = 59.93
Stock to flow model = 0.4 x SF ^ 3
Stock to flow model = 0.4 x 59.93 ^ 3
Therefore Stock to flow model =86097.95 BTC.
Conclusion.
The metric indicators are very helpful and useful indicators that help investors to decide on their stance with the currency. We can see and observe with success of Bitcoin and Ethereum how to be able to use and organize the metric indicators for profitable investments.
Thank you for reading and God bless you.
CC : @pelon53