The Mayer Multiple measures the difference between the current price of bitcoin and the 200-day moving average.
The Mayer Multiple is used to show when Bitcoin’s price is overbought or oversold throughout time periods. It’s worth noting that as the market becomes larger and less volatile, the peaks are becoming less exaggerated.
The metric was created by early Bitcoin investor and podcast host Trace Mayer in 2017 to analyze the price of Bitcoin in a historical context
In technical analysis, it's generally considered a bullish (or positive) indicator when prices are above the long-term moving average (MA), whereas it's considered bearish (or negative), when the price is below the moving average.
According to Trace Mayer, a value of 2.4 or more is considered a speculative bubble.
When using Mayer Multiple, the two specific values to pay keen attention to are 1 and 2.4. The significance of a 1 multiple is simple: any value above 1 means bitcoin's price has risen above the 200-day MA and any value below 1 means price has fallen beneath it.
Any multiple above the 2.4 threshold has historically shown to signify the beginning of a speculative bubble, which is significant because all bubbles eventually burst, causing a rapid depreciation. By conducting simulations based on historical data, Mayer deduced that the best long-term results were gathered by accumulating bitcoin when the Mayer Multiple was below 2.4.
