Bitcoin Cycle Analysis
A look into some short-term targets for bitcoin.
With bitcoin reaching new all-time highs, we’ve started receiving messages from people around us asking what to do. This post aims to provide ideas on how to think about bitcoin cycles and navigate the current one. We are sailing on the waves of bitcoin cycles, and we must adjust our sails appropriately—deploying enough sails to prevent stalling when there’s little wind, yet being cautious not to deploy too many, risking capsizing during volatile storms.
Mayer Multiple
The Mayer Multiple is the ratio between bitcoin’s market price and its 200-day moving average. For instance, if the ratio is 1.2, it means the 200-day moving average is around $100,000, while the market price of bitcoin is $120,000.
When deriving historical averages for this multiple, as well as standard deviation channels (using Z-scores), one can identify statistically significant points and effectively compare cycles even when the prices differ significantly. It’s not our intention to provide a lesson in statistics, but to make our point clearly, we must briefly explain some basics. A Z-score of zero indicates the Mayer multiple is exactly at its historical average:
In this case, the Mayer Multiple’s historical average (as seen from the chart above) lies at 1.34, which itself is insightful: it implies that, on average, bitcoin trades roughly 34% above its 200-day moving average.
The red dotted line in the chart’s oscillator above (bottom pane) represents the historical average + 1.5 standard deviations. In a normal distribution, this means roughly 93% of data points fall below this level. The orange dotted line represents +1 standard deviation, indicating approximately 84% of data points fall below this threshold. To translate this into understandable figures, here’s a table:
Looking at the chart above, notice previous cycles where the multiple exceeded the red dotted line. In 2017, it touched this mark three times, with the breakout above it marking the cycle’s peak. In 2019, the multiple briefly reached the mark but did not sustain above it, indicating a local top. Early in 2021, the oscillator again surpassed this threshold.
Today, this cycle differs from previous ones. Bitcoin is currently oscillating between -1 and +1 standard deviations. It periodically becomes overbought and oversold, but nothing extraordinary, consistently following a gradual stair-stepping pattern.
What does this imply? According to this metric, bitcoin’s price could appreciate to approximately $161,000 without becoming extremely overheated.
Could it be classified as overbought at that level? Yes, that’s likely. Might we see a local peak, followed by consolidation and a potential correction? Probably.
It’s essential to remember that the 200-day moving average is, by definition, a moving figure. As the market price climbs over extended periods, the moving average gradually rises, adjusting potential correction and retracement targets accordingly.
If the price continues climbing toward $161,000, could it signal the cycle’s peak? It could, but not necessarily. Let’s explore additional metrics before drawing any definitive conclusions.
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Market Value Versus Realized Value
The previous metric was based solely on price. For a more reliable assessment, it’s better to utilize different types of datasets for comparison. MVRV (Market Value to Realized Value) is familiar to TBL Pro members. It’s the ratio between the Market Price and the Realized Price (for a quick reminder, you could revisit the on-chain section of our Mean Median Mode report):
We’ve employed the same approach here as in the Mayer Multiple part. The MVRV is essentially a multiple of the Realized Price. The oscillator displays a similar pattern to the Mayer Multiple but has some key differences, primarily due to how the realized price changes.