Trace Mayer is a well known Bitcoin expert and venture capitalist who was actively involved with blockchain when BTC was selling at around $0.25. To say he was early to the party would be a monumental understatement.
His knowledge about the network as a whole, as well as the fundamentals behind its price movements provide precious insights into the questions everyone is asking: What will Bitcoin do next and how high can the price really go?
In a recent interview with Pure Blockchain Wealth, Mayer says there are seven key network effects one must consider to help quantify Bitcoin’s value and understand where we are within the overall trend.
Speculation, Merchants, Consumers, Miners, Developers, Financialization, World Reserve Currency… the network effects will interact and exponentially reinforce each other…
As for valuation and pricing, Mayer utilizes a key set of metrics that have been dubbed the Mayer Multiple by blockchain enthusiasts. The Multiple has been quite accurate when it comes to predicting not just Bitcoin’s potential price highs, but when it is overvalued and at risk of correcting or crashing.
Using this methodology, which focuses on current price movements and the 200-day moving average along with other factors, Mayer says Bitcoin could rocket 10-fold over the course of 2018.
You want to acquire assets when they are undervalued and you want to divest and reallocate into undervalued assets when you’ve got assets that are overvalued.
In December, when Bitcoin ran to $17,000, the Mayer multiple got all the way up to 3.8x… Anytime the price gets very overstretched on that 200-day moving average… anytime that multiple gets really high, the statistics are not in your favor for having a good entry point into Bitcoin.
When we look at 2018 we could continue having a correction and this consolidation… we might even have this consolidation for another two or three months… Then if we have another bull run that starts up and people decide they want to start buying Bitcoin again, we could have a 200-day moving average that’s up to ten or fifteen thousand dollars… and then we could have another bull run and that could go to 4x the 200-day moving average and the 200-day moving average would rise also during that time.
…and that could give us a significantly overvalued price of $115,000.
The full interview is available below and well worth your time, as one of the foremost experts in this sector explains how he assesses Bitcoin value and future trends:
As of March 7, with Bitcoin around $10,600 USD, the Mayer Multiple is hovering around a low point of 1.20, suggesting that Bitcoin is priced relatively cheap compared to the 200-day moving average and the December 2017 highs.
The current Mayer Multiple is 1.20 with a $BTC price of $USD 10,678.77 and a 200 day moving average of $8,880.46 USD. The @TIPMayerMultple has historically been higher 53.26% of the time with an average of 1.58. Learn more about how to use this tool at: https://t.co/9n0xlTWuNP
— Mayer Multiple (@TIPMayerMultple) March 7, 2018
The question, of course, is whether or not now is a good time to be acquiring Bitcoin. Mayer’s assessment suggests it may well be, with a Bull Run soon to take hold:
Long story short… we’ve got all these network effects exponentially reinforcing each other… We’ve had fundamental innovation and extension at the protocol level of Bitcoin… the second layer is getting built out so we can move into the second and third network effects… The sixth network effect has been approved by the regulators… and there is a mountain of money waiting to move in.
This interview has been brought to you by Pure Blockchain Wealth
Follow Trace Mayer at the Bitcoin Knowledge Podcast