Mayer Multiple

Data from Bitcoin's Mayer Multiple suggests low risk/return conditions at current levels, but macro conditions still trouble long-term optimism.

Bitcoin (BTC) is attempting to reclaim a key long-term moving average, but the time to buy is before, not after, one metric hints.

In a series of tweets on March 29, on-chain monitoring resource Ecoinometrics eyed a classic entry for BTC/USD as flagged by the Mayer Multiple.

Mayer Multiple nears pivot

Bitcoin price strength has endured as the week gets underway, the largest cryptocurrency putting in its highest levels of 2022 overnight.

Some key moving averages have also fallen to bulls, and while the trend is not yet definitive, optimism is increasing that Bitcoin could even challenge November's all-time highs based on that fact.

Next in line, meanwhile, is the 200-day moving average (DMA), currently at $48,300 and just tapped in the past 24 hours. The 200DMA is a key component of the Mayer Multiple metric, which measures spot price ratio to it in order to determine potential profitable market entry points.

A score below 2.4 on the Multiple tends to signal good long-term rewards for investors. Having bottomed in January at around 0.76, its trend has reversed since, and as of Tuesday — almost right at the 200MA — Bitcoin has a Mayer Multiple score of 0.98.

"That's a good time to buy," Ecoinometrics argued in comments, adding that even if a breakout from the 200DMA ends up being a bull trap, losses in such situations have historically been "small."

"So even though the macro backdrop isn't looking good, this is a buy," a further post continued.

"When it comes to these strategies with asymmetric returns you have to be systematic."

Derivatives lose their speculative tinge

Those macro tensions, which include inflation and central banks' attempts to fight it with monetary policy tightening, remain a key topic of debate this month.

Related: Buy pressure ‘in bull market territory’ — 5 things to know in Bitcoin this week

As Cointelegraph reported, multiple analysts have warned that the outlook could still turn firmly against Bitcoin and risk assets more broadly as rates rise and a "stagflationary" environment emerges.

The sense that a sustained rally in BTC cannot possibly form the new paradigm is evident among professional traders, as derivatives markets funding rates remain flat despite weekly gains approaching 20% for BTC/USD.

"Excessive long biased derivative market speculation is near non-existent currently," analyst Dylan LeClair noted in a Twitter thread on the topic Monday.

Displayed below are annualized perpetual future funding rates (24 hour MA).

Traders were paying ~100% annualized to go long $BTC early in 2021. A similar but less severe speculative market arose in the fall.

Today? Funding has been flat/negative for most all of 2022.

2/3 pic.twitter.com/lliXS72hrR

— Dylan LeClair (@DylanLeClair_) March 28, 2022

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

An increasingly rare bull signal for investors comes after both the Mayer Multiple and Bitcoin price shed 50% versus November 2021.

Bitcoin (BTC) has dipped enough for one of its best-known indicators to signal a rare long-term investment opportunity is here.

As of Feb. 22, the Mayer Multiple is sitting at its lowest level since Bitcoin bounced at $29,000 in July last year.

Mayer Multiple down 50% in 3 months

The latest in a series of metrics to echo the pit of the 2021 retracement on BTC/USD, the Mayer Multiple currently measures 0.76, having halved since November's $69,000 all-time high.

The Multiple measures Bitcoin's current price against its 200-day moving average. Its creator, Trace Mayer, believes that any reading below 2.4 offers an increasingly profitable trade for potential investors, and the lower the score, the more likely a long-term buy-in will turn out to be effective.

For context, the Multiple spends most of its time above 0.8 and has been higher than its current level 87% of the time since 2011.

The current dip on the metric did not go unnoticed, with various social media users drawing attention to it last week.

Another curiosity lies in November's latest peak. Despite all-time high prices, the Multiple only reached the area around its historical median of 1.42, making the $69,000 top unlike previous ones.

Where are the deposits?

As Cointelegraph reported this week, meanwhile, existing investors are overwhelmingly choosing to hodl their BTC.

Related: Bitcoin network activity down 30% from highs as ‘tepid’ demand mimics mid-2019

Those who purchased a year ago or before are growing in numbers, even as prices begin to dip below their position from the same time in 2021.

#Bitcoin $BTC Percent Supply Last Active 1+ Years just reached a 14-month high of 60.998%

Previous 14-month high of 60.993% was observed on 21 February 2022

View metric:https://t.co/1j255TMTVz pic.twitter.com/CLG26IZqK1

— glassnode alerts (@glassnodealerts) February 22, 2022

With precious little interest from retail investors, however, commentators argue that the current setup is one all but dictated by market makers.

"After peaking in May of last year, Taker Buy Volume (liquidity) is declining. For one year, the expected movement did not appear and liquidity decreased, New deposits continue to decline," Mignolet, a contributor to on-chain analytics firm CryptoQuant's Quicktake series, summarized Sunday.