The $863B Crypto May Be Shut to Base
The Mayer Multiple, which measures the difference between an asset’s current market value and its 200-day simple moving average, suggests that the crypto bear market has run its course. Mayer Multiple was at 0.53. This means that the crypto market, valued at $863 billion, was almost half the 200-day average of $1.603 trillion.
Last month, the metric dropped below 0.5. And the market value reached 762.8 billion dollars. Previous crypto bear markets have ended below the Mayer Multiple of 0.5. If history is any guide, the market may have finally found a June low of $762.8 billion. Developed by Bitcoin investor Trace Mayer, the Mayer Multiple helps investors identify oversold. Also, overbought conditions relative to the market value relative to the 200-day SMA.
The assumption is that the market will revert or retrace to its average. This is represented by the 200-day SMA following extended downtrends or uptrends. In the past, values of 0.5 or below marked endpoints. Conversely, readings above 2.4 indicate the final stages of a bull market. These are characterized by the anger of retail investors.
Crypto Future
The 200-day SMA is one of the most widely sought measures of long-term trends. According to the theory of technical analysis, An asset is said to be in a bear market when its price falls below the 200-day SMA and vice versa. According to a Glassnode report, when prices trade below the 200DMA, it is often considered a bear market. When prices trade above the 200DMA, it is perceived as a bull market.
The Mayer Multiple is not the only indicator that signals the end of a bear market. Recently, chain indicators flashed similar signals. However, end conduct is no guarantee of upcoming results. Moreover, Bitcoin, the leading cryptocurrency by market value, has turned into a risky asset after the spring 2020 crash. Accordingly, the crypto market is more sensitive to the monetary policy of the Federal Reserve Bank and inflationary factors than during previous bear markets.
On Wednesday, US inflation hit a four-decade high of 9.1%. That led to bets on a 100 basis point rate hike later this month. The valuation of the crypto market has declined by 70% since November, fearing a faster withdrawal of liquidity by the Fed.
