The Mayer Multiple was developed by Trace Mayer, a prominent Bitcoin investor and entrepreneur, as a tool for assessing Bitcoin's valuation. Mayer's model is grounded in the belief that Bitcoin's long-term price trends are indicative of its intrinsic value, with the 200-day moving average serving as a benchmark for evaluating its current price. By comparing the two, the Mayer Multiple provides a quantitative measure of Bitcoin's market position, enabling investors to gauge its potential for price appreciation or correction.
Mayer Multiple = Current Price / 200-Day Moving Average
A key aspect of the TMG model is its focus on the long-term trend rather than short-term fluctuations. By comparing the current price to the 200-day moving average, the TMG identifies whether Bitcoin is trading above or below its established trend. A high Mayer Multiple (significantly greater than 1) suggests that Bitcoin may be experiencing a phase of overvaluation, reflecting a bullish trend that has potentially exceeded sustainable levels. Conversely, a Mayer Multiple below 1 indicates undervaluation, signaling that Bitcoin's price is below its long-term average and may be poised for upward correction.
The TMG model employs this understanding to generate a Price Indicator, which ranges from -100 to 100. This gradient reflects the model's assessment of the likelihood of Bitcoin's price movement in a specific direction. A value towards -100 suggests a strong potential for price increase (signaling undervaluation), whereas a value towards 100 indicates a likelihood of price decrease (suggesting overvaluation).
In addition to the core analysis, TMG incorporates machine-learned mathematical operations to refine the Price Indicator's accuracy. These operations adjust the output based on nuanced patterns and trends identified in historical data, ensuring that the Price Indicator remains sensitive to both overt and subtle market dynamics.