RT-Mayer Multiple

22 nov

The Mayer Multiple is a simple metric used to gauge whether Bitcoin is overvalued, undervalued, or fairly priced relative to its long term trend. It compares Bitcoin’s current price to its 200 day moving average and expresses that relationship as a single number.

Introduction
The Mayer Multiple was popularized by investor Trace Mayer as a way to track how far Bitcoin has stretched above or below its 200 day moving average (200DMA). The basic idea is:

Mayer Multiple = Current Bitcoin Price / 200 Day Moving Average of Bitcoin

When this ratio is low, price is trading close to or below its long term trend. When it is very high, price is extended well above trend and risk of mean reversion grows.

This script takes that concept and turns it into a set of colored bands around price. Instead of just plotting a single Mayer Multiple line, it maps different ranges of the multiple into visual “zones” so traders can quickly see whether Bitcoin is in a typical range, an accumulation zone, or a historically stretched area.

Behind The Math
In this implementation, the current Mayer Multiple value is computed for each bar and then mapped into band levels that typically span from roughly 0.4 up to the 8.0+ region. Each band represents a different multiple of the 200DMA.

Conceptually:

• Values near 1.0 mean price is trading near its 200 day moving average.
  
• Values well below 1.0 highlight periods where price is trading at a discount to long term trend.
  
• Values far above 1.0 highlight periods where price is trading at a large premium to long term trend.
  

By converting these ranges into layered color zones, the script lets traders see where current price sits in the broader historical distribution of Mayer Multiple values, instead of focusing on a single number. In the chart below, the formula is overlaid in the center of the screen so you can see how the multiple is defined while looking at the bands.

Points Of Interest
Two regions on the Mayer structure tend to attract the most attention: lower “accumulation” areas and higher “distribution” areas.

Accumulation
Historically, many of the best long term accumulation opportunities have occurred when the Mayer Multiple spent time below roughly 0.9. In those zones, price is trading below its 200DMA and the band colors indicate that Bitcoin is at a relative discount compared to its long term trend. In the example chart below, the white arrows highlight past periods where price spent time in the lower bands while the Mayer Multiple was below roughly 0.9.

Distribution
On the other side, readings above roughly 2.0 have often lined up with distribution or profit taking areas, where price is extended well above the 200DMA. These zones have frequently preceded larger drawdowns or multi month cooling periods. In the example chart below, the white arrows highlight periods where price pushed into the upper bands above 2.0, areas that have often preceded larger cooling phases.

The 2.4 Rule
During the original exploration of the Mayer Multiple, backtests suggested that buying when the multiple was already above about 2.4 tended to produce weaker risk adjusted returns. In simple terms, history showed that:

• A Mayer Multiple above 2.4 means Bitcoin is trading at more than 240 percent of its 200 day moving average.
  
• Many of the most extreme speculative peaks occurred when the multiple was in or above this zone.
  
• After such peaks, price often reverted back toward the 200DMA with drawdowns in the 30 percent to 80 percent range.
  

In this script, the 2.4 level is highlighted as a caution band. It does not mean price must reverse immediately, but it marks an area where the balance between upside potential and downside risk has historically shifted. In the chart below, the white arrow marks the 2.4 band that this script highlights as a caution zone.

Why Traders Watch This Zone
There are a few reasons traders and investors watch the upper Mayer bands, especially the 2.4 area:

• Historical patterns – Many of Bitcoin’s more extreme tops, such as late 2013, late 2017, and early 2021, occurred when the Mayer Multiple was well above 2.0 and frequently near or above 2.4.
  
• Overheated zone – When price is this far above its long term average, markets are often driven by FOMO and speculative flows rather than steady accumulation.
  
• Mean reversion risk – Over time, price has repeatedly reverted back toward or below the 200DMA after visiting these upper bands.
  
• Risk / reward balance – Above 2.4, the probability of large additional gains tends to shrink relative to the risk of a sharp correction, which is why many longer term participants treat it as a caution area rather than a fresh entry zone.
  

How Traders Use The Bands
Traders can use the Mayer Multiple bands in different ways depending on their style:

• Long term investors may look for accumulation when the multiple is below 1.0 and be more cautious when it moves into higher bands.
  
• Swing traders may use the bands as context when combining this script with structure, volume, or other timing tools.
  
• Cycle focused traders may use the multiple to help frame where Bitcoin could be within a broader four year cycle.
  

This script is not a timing system by itself. It is intended as a context layer that helps answer “where are we relative to long term trend?” in a visual way.

What Makes This Tool Different
Many resources plot the Mayer Multiple as a single ratio line. This script focuses on turning that ratio into a banded structure around price so traders can see cycle zones on the chart itself:

• It computes the Mayer Multiple on each bar and maps the value into multiple color coded bands instead of a single line.
  
• It highlights historically important regions such as deep discounts, mid range trend zones, and high risk extension zones including the 2.4 band.
  
• It is designed specifically for Bitcoin’s long term behavior, but the visual framework can be useful for studying other assets that have strong trend cycles.
  

Important Note
This indicator is intended to provide additional context around where price sits relative to its long term trend. It is not a standalone signal generator and should always be used together with your own analysis, testing, and risk management. Historical Mayer Multiple behavior does not guarantee future results, and past cycle extremes may not repeat in the same way.

🐋 Tight lines and happy trading!

22 nov

Note di rilascio

Syntax clean up and updating chart screen shot.