• Investors may be influenced by cognitive biases such as anchoring, which could lead them to predict a BTC decline in light of the 150% price increase this year.
  • Bitcoin is not overvalued, according to indicators like the MVRV Z Score, Mayer Multiple and Puell Multiple. It could even continue to rise in 2024.

BTC Price Index and Live Chart – CoinDesk”>(BTC), the leading cryptocurrency by market value, has surged over 150% this year, beating traditional assets like the S&P 500, gold, and the U.S. dollar by a huge margin.

Some investors, especially those who are “anchored” in the brutal bear markets of 2022 and haven’t experienced previous crypto bull runs, may intuitively perceive the cryptocurrency to be overvalued, and predict a price decline in the coming month. Anchoring is a mental bias that leads investors to make future decisions based on data from the past.

Investors in traditional finance who are interested in bitcoin may fall prey to the anchoring bias, and wait instinctively for lower entry prices. In conventional markets, assets seldom double in value within a year. Investors are also susceptible to loss aversion. This is a mental behavior that causes them to book out winning trades sooner and hold on to losing bets longer.

However, believing in these cognitive biases could be costly, as three indicators, including the miner flow, the 200-day moving-average, and tracking the activity on the Bitcoin Blockchain, suggest that the cryptocurrency still has plenty of upside.

Let’s examine these indicators in more detail.

Puell Multiple

The Puell Multiple is a measure of the U.S. Dollar value of each bitcoin that’s issued daily in relation to the 365 day moving average dollar value. Here, the issuance refers to current supply – minted coins or new ones released to the network. Since the last half-discount in early 2020 miners have produced roughly 900 tokens each day.

Elevated readings suggest that miners are profitable compared to their average yearly profit. They could therefore liquidate more quickly, increasing the bearish pressures on the market. Low readings indicate otherwise.

Readings higher than four in the past have been associated with market peaks. Values as high as ten were recorded during early bull cycles. Multiples less than 0.5 indicate market bottoms.

According to Glassnode, at the time this article was written, the Puell Multiple was 1.53, well below the red zone of four.

After Bitcoin’s fourth reward halves in March, the Puell Multiple may fall back into the accumulation zone. (Glassnode) (Glassnode)

After the mining reward is halved , it’s possible that the indicator will slide back to accumulation (below 0.5). The code inbuilt will reduce the bitcoin per block issuance to 3.25 BTC, from 6.5 BTC.

The analysts at Blockware Intelligence stated in their latest weekly newsletter that the only way to quickly recover this metric is to increase the price of BTC.

The next half-doubling is expected to occur in March 2024. Analysts added that this is not far off.

MVRV Z score

The Z-score for the market value to realized value (MVRV), ratio of bitcoin, shows how much market capitalization is different from its fair or realized value.

Market capitalization can be calculated by multiplying all tokens in circulation with the current market price. The realized value can be calculated as a variation on the market capitalization by dividing all bitcoins by their value at the time they were moved onto the blockchain by the total number of coins. This metric does not include coins that have been removed from circulation, and it is believed to reflect the true value of the blockchain.


(Glassnode) (Glassnode) The metric measures how many standard deviations market capitalization is from its realized or fair value. (Glassnode) (Glassnode)

The Z-score was 1.6 at the time of publication, which indicates that cryptocurrency is not overvalued, and could continue to rise next year as predicted by many analysts.

In the past, Z-scores higher than eight have indicated overvaluation, and bull market tops. Negative values have shown discounted prices, and bear market bottoms.

Mayer Multiple

The Mayer Multiple is a measure of the difference between the current price of bitcoin and the 200-day simple Moving Average (SMA) developed by Trace Mayer.

By comparing current market prices with their 200-day moving mean, the indicator can help identify overbought or oversold situations. After extended bullish/bearish trend pushes the multiple above/below 0, the assumption is that the markets will return to their mean or 200-day SMA.

The Mayer Multiple at the time this article was written was 1.404. This means that bitcoin’s $42,937 price was 1.4 times the 200-day SMA of $30,563.

The 200-day SMA is a widely used gauge of long-term trends. The 200-day SMA has become one of the most widely used gauges for long-term trends. According to technical analysis, a stock is considered a bull once its price drops below the 200-day SMA.


(TradingView/CoinDesk) (TradingView/CoinDesk) Mayer multiple can help identify overbought or oversold situations. (TradingView/CoinDesk) (TradingView/CoinDesk)

Parikshit Miishra is the editor.