This on-chain metric signals the bottom of the BTC correction
2 min readMayer Multiple is an on-chain indicator. It is used to determine the trend and uses the price ratio BTC and its 200-day moving average (MA). It currently indicates a bottom for BTC and its correction.
- To determine peak cycle a multiple is used 2.4 MA (purple)
- To determine bottom of the cycle a multiple is used 0.8 MA (green)
So far, the price has peaked at 2.4 MAs during each peak. Sometimes, however, it does so just before the peak, as it was in February last year (black circle). At that time BTC just over $ 50,000.
On the contrary, the bottom BTC it is not as accurate as the vertices. While BTC has actually moved below 0.8 MA every day, it sometimes moves below it for a long time until it reaches the bottom. This was the case in 2018 (red circle), when the price hovered above and below the line several times.
Has BTC reached the bottom?
An actual reading of Mayer’s multiple is drawn as a line (blue), with the horizontal multiples of 0.8 (green) and 2.4 (red) acting as the lower and upper bounds.
If the indicator is below the green line, it is long-term oversold and if it is above the red line, it is long-term overbought.
There are similarities between the current movement and the July 2018 movement (black rectangle). In both cases, the indicator was just above 0.8.
In 2018, however, the price BTC eventually broke and led to a bottom in December 2018. Thus, if the indicator does not stay above the 0.8 oscillator, it may lead to a further decline for BTC.
In conclusion, we can evaluate that the indicator reaches a value close to 0.8 and mostly this has meant historically bottom market. However, if the indicator falls below this oscillator again, it may mean that BTC is still in the bear market for some time.
