Despite trading at record high prices, a key long-term indicator for Bitcoin suggests the asset is far from overvalued and may have significant room for upward movement. The Mayer Multiple, an on-chain metric used to gauge market sentiment, is currently at a level historically associated with sustainable growth, leading some analysts to project a potential price target of $180,000.
Key Takeaways
- The Mayer Multiple, a ratio of Bitcoin's price to its 200-week moving average, is currently at a low reading of 1.16.
- Historically, a reading above 2.4 has signaled market tops, indicating Bitcoin is not currently in an "overbought" state.
- Analysts suggest that for the indicator to reach this overbought level, Bitcoin's price would need to climb to approximately $180,000.
- Separately, the tightening of weekly Bollinger Bands suggests a period of high volatility may occur within the next 100 days.
Gauging Market Temperature with the Mayer Multiple
To understand Bitcoin's long-term cycles, analysts often turn to on-chain indicators that provide insight beyond daily price fluctuations. One of the most referenced is the Mayer Multiple, which measures the current price of Bitcoin against its 200-week (nearly four-year) moving average. This simple ratio acts as a market temperature gauge.
A high reading suggests the price has risen significantly faster than its long-term trend, signaling potential speculative excess or an "overheated" market. Conversely, a low reading indicates the price is closer to its historical baseline, suggesting the market is cooler and may have more capacity for growth.
What is the 200-Week Moving Average?
The 200-week moving average (WMA) is a long-term trend indicator that smooths out price data by calculating the average closing price over the previous 200 weeks. It is widely considered a fundamental baseline for an asset's long-term value, with prices trading above it signifying a bull market and prices below it suggesting a bear market.
Current Reading Signals Sustainable Momentum
According to data from analytics platform Checkonchain, the Mayer Multiple is currently at just 1.16. This level is considered low, especially given that Bitcoin has been trading near its all-time highs. It suggests the recent price appreciation has been steady and is well-supported by its long-term trend, rather than being the result of a short-term speculative frenzy.
Analyst Fetter commented on the situation on the social media platform X, stating, "Bitcoin is at all-time highs and the Mayer Multiple is ice cold." This observation highlights the unusual dynamic where price strength is not accompanied by indicator-based signs of overheating.
"I like the setup," Fetter added, implying that the current conditions are favorable for continued upward movement.
Historical Precedent and Future Projections
The significance of the current Mayer Multiple reading becomes clearer when compared to previous market cycles. In past bull markets, such as those in 2017 and 2021, the indicator soared well above the 2.4 threshold. This level has historically served as a reliable signal that the market has reached a speculative peak and a major price correction is likely.
This cycle has behaved differently. Data from Glassnode shows that the highest point the Multiple has reached so far was 1.84 in March 2024, when Bitcoin's price was near $72,000. The fact that it did not reach the traditional 2.4 peak suggests this bull market may be more mature and sustainable.
The $180,000 Price Target
The projection of Bitcoin reaching $180,000 is derived directly from the Mayer Multiple's historical data. For the indicator to reach the 2.4 "overbought" level, Bitcoin's price would need to be 2.4 times its current 200-week moving average. Based on the present trend, this calculation points toward a price of approximately $180,000.
This sentiment is echoed by other researchers. In July, crypto researcher Axel Adler Jr. noted that readings around 1.1 represent "a good fuel reserve for a new upward impulse." This reinforces the idea that the market has ample capacity for further price increases before reaching historically frothy levels.
Short-Term Volatility Expected
While long-term indicators paint a bullish picture, other technical tools suggest a period of significant price movement could be imminent. Trader Tony “The Bull” Severino has highlighted a different indicator, the Bollinger Bands on Bitcoin's weekly chart, as a reason for caution and anticipation.
Bollinger Bands consist of a middle band (a simple moving average) and two outer bands that are standard deviations away. When these bands tighten or "squeeze," it indicates a period of low volatility that is often followed by a sharp price move in either direction.
A Decisive 100-Day Window
According to Severino, the Bollinger Bands on Bitcoin's weekly chart have tightened to an unprecedented degree. He suggests this sets the stage for a critical 100-day period that could determine the fate of the current bull cycle. The market could either break out into a parabolic rally or see the current cycle lose momentum.
Severino also issued a warning about potential "head fakes," or false breakouts, which are common in such conditions. He pointed to a recent instance where Bitcoin briefly touched $126,000 but failed to sustain a move above the upper Bollinger Band, hinting that a price dip could occur before a more sustained rally.
Currently, Bitcoin is trading around $122,700, consolidating below its record highs as market volatility continues to compress. While opinions are divided on the immediate direction, the underlying data from long-term indicators like the Mayer Multiple provides a strong argument for sustained long-term growth.
