Puell Multiple Variants [OperationHeadLessChicken]

Overview

This script contains three different, but related indicators to visualise Bitcoin miner revenue.

1. The classical Puell Multiple: historically, it has been good at signaling Bitcoin cycle tops and bottoms, but due to the diminishing rewards miners get after each halving, it is not clear how you determine overvalued and undervalued territories on it. Here is how the other two modified versions come into play:
   
   
2. Halving-Corrected Puell Multiple: The idea is to multiply the miner revenue after each halving with a correction factor, so overvalued levels are made comparable by a horizontal line across cycles. After experimentation, this correction factor turned out to be around 1.63. This brings cycle tops close to each other, but we lose the ability to see undervalued territories as a horizontal region. The third variant aims to fix this:
   
   
3. Miner Revenue Relative Strength Index (Miner Revenue RSI): It uses RSI to map miner revenue into the 0-100 range, making it easy to visualise over/undervalued territories. With correct parameter settings, it eliminates the diminishing nature of the original Puell Multiple, and shows both over- and undervalued revenues correctly.
   

Example usage

The goal is to determine cycle tops and bottoms. I recommend using it on high timeframes, like monthly or weekly. Lower than that, you will see a lot of noise, but it could still be used. Here I use monthly as the example.

1. The classical Puell Multiple is included for reference. It is calculated as Miner Revenue divided by the 365-day Moving Average of the Miner Revenue. As you can see in the picture below, it has been good at signaling tops at 1,3,5,7.
   
   The problems:
   - I have to switch the Puell Multiple to a logarithmic scale
   - Still, I cannot use a horizontal oversold territory
   - 5 didn't touch the trendline, despite being a cycle top
   - 9 touched the trendline despite not being a cycle top
   
   
2. Halving-Corrected Puell Multiple (yellow): Multiplies the Puell Multiple by 1.63 (a number determined via experimentation) after each halving. In the picture below, you can see how the Classical (white) and Corrected (yellow) Puell Multiples compare:
   
   Advantages:
   - Now you can set a constant overvalued level (12.49 in my case)
   - 1,3,7 are signaled correctly as cycle tops
   - 9 is correctly not signaled as a cycle top
   
   Caveats:
   - Now you don't have bottom signals anymore
   - 5 is still not signaled as cycle top
   
   Let's see if we can further improve this:
   
   
3. Miner Revenue RSI (blue):
   
   On the monthly, you can see that an RSI period of 6, an overvalued threshold of 90, and an undervalued threshold of 35 have given historically pretty good signals.
   
   Advantages:
   - Uses two simple and clear horizontal levels for undervalued and overvalued levels
   - Signaling 1,3,5,7 correctly as cycle tops
   - Correctly does not signal 9 as a cycle top
   - Signaling 4,6,8 correctly as cycle bottoms
   
   Caveats:
   - Misses two as a cycle bottom, although it was a long time ago when the Bitcoin market was much less mature
   - In the past, gave some early overvalued signals
   

Usage

Using the example above, you can apply these indicators to any timeframe you like and tweak their parameters to obtain signals for overvalued/undervalued BTC prices

• You can show or hide any of the three indicators individually
  
• Set overvalued/undervalued thresholds for each => the background will highlight in green (undervalued) or red (overvalued)
  
• Set special parameters for the given indicators: correction factor for the Corrected Puell and RSI period for Revenue RSI
  
• Show or hide halving events on the indicator panel
  
• All parameters and colours are adjustable