Recent on-chain data shows that the Bitcoin price is currently in an important phase, raising suspicions about whether the market is approaching a cyclical low.
Mayer Multiple drops to 0.6 – what this means
In a recent Quicktake post on the CryptoQuant platform, on-chain analyst Ruga Research pointed out that the Bitcoin price now has a negative 40% deviation from its 200-day moving average. This on-chain observation revolves around the Bitcoin Mayer Multiple.
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For context, the Mayer Multiple statistic tracks how far the current price of a coin is trading above or below the long-term trend. This indicator can achieve this by dividing the price by the 200-day moving average.
When the statistic shows a value of 1, it generally means that the Bitcoin price is trading at approximately the 200-day MA. Meanwhile, values above 1 reflect that the Bitcoin price is higher than its long-term trend, while values below 1 suggest that the price is trading at a discount.
Historically, the metric has had different thresholds depending on market conditions. For example, when the value reaches a level above 2.4, it often indicates that the Bitcoin price is in an overbought zone (also called the bubble zone).
As previously explained, 1 – 1.5 represents the normal bull market range, while 0.8 – 1.0 is typically the discount zone (where accumulation often occurs). Particularly, when the price drops to regions below 0.8, it indicates that the Bitcoin price is oversold due to capitulation events.
Ruga Research found that the benchmark currently stands at 0.6, which reflects a deviation of about 40% below Bitcoin’s long-term trend. So it is clear that the Bitcoin price is at a statistical extreme.
Historical data where the Mayer Multiple fell to similar levels also adds to the credibility of this level’s relevance. In December 2018, the metric dropped to the 0.5 – 0.6 range (near the bottom of the Bitcoin market around $3,200), before the price witnessed a growth of over 540%.
Similarly, the metric fell to 0.5 due to the COVID crash, followed by a recovery and increase in Bitcoin price by 1,100% in another 12-month period. This scenario also repeated itself in November 2022, with the Mayer Multiple falling to the same region, after which the BTC price rose by over 170%.
However, Ruga Research mentioned as a caveat that the metric does not indicate exactly where and when a bottom will form, but only reveals what we can expect in the long term. It is also possible that the measure will see further downside moves or some consolidation before heading back up.
Bitcoin price at a glance
At the time of writing, Bitcoin is worth approximately $70,383, reflecting an increase of more than 2% in the past 24 hours.
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Featured image from iStock, chart from TradingView