Bitcoin Trading 40% Below Its 200-Day MA: A Historical Look at What's Next
Bitcoin Trading 40% Below Its 200-Day MA: A Historical Look at What's Next
Recent on-chain data, particularly the Mayer Multiple, shows Bitcoin's price is 40% below its 200-day moving average, a level historically associated with market bottoms. With the Mayer Multiple at 0.6, the cryptocurrency is signaling an oversold condition. Past instances at similar levels in 2018, during the COVID crash, and in 2022, were followed by significant price recoveries ranging from 170% to 1,100%. While an analyst cautions that a precise bottom cannot be predicted, the data suggests a strong long-term upside potential, despite possible short-term consolidation.
Bitcoin's Deep Dive Below 200-Day Moving Average
Recent on-chain data indicates that the Bitcoin price is currently at an important phase, leading to speculation about whether the market is nearing a cyclical bottom. On-chain analyst Ruga Research, via the CryptoQuant platform, highlighted that the Bitcoin price now has a 40% negative deviation from its 200-day moving average, a key observation based on the Mayer Multiple metric.
The Mayer Multiple is an indicator that tracks how far a coin's current price deviates from its long-term trend (200-day MA). A reading of 1 signifies trading at the 200-day MA, while readings below 1 suggest a discount. Historically, levels below 0.8 often signal an oversold market, typically following capitulation events. The metric currently stands at 0.6, reinforcing the notion that Bitcoin is in a statistically extreme oversold position.
Historical precedents lend significant weight to this observation. In December 2018, when the Mayer Multiple fell to the 0.5 – 0.6 range, Bitcoin's price subsequently surged by over 540%. Similarly, following the COVID crash, the metric hit 0.5, preceding an 1,100% recovery. Most recently, in November 2022, a drop to this region was followed by a more than 170% increase in BTC's price. These patterns suggest that current levels could mark a significant accumulation zone for long-term investors.
However, Ruga Research provides a crucial caveat, noting that while the metric reveals long-term expectations, it doesn't precisely pinpoint the timing or exact formation of a market bottom. There remains a possibility of further short-term downside or consolidation before an upward trajectory. Currently, Bitcoin is trading around $70,383, having seen an over 2% jump in the past 24 hours.