Can gold and silver prices predict Bitcoin’s next move?

Although some Bitcoin bulls refer to BTC as digital gold, the physical precious metal may be a good way to predict Bitcoin’s future price movements.

One Bitcoin trader brought up the BTC/Goldmayer multiple when explaining his bullish stance on the cryptocurrency.

Mayer Multiple History

This multiple compares the Bitcoin to gold ratio to the 200-day moving average, and proponents of this indicator believe that Bitcoin is undervalued if the Mayer multiple is below 1.

User X noted that the only time this ratio was this low was during the Bitcoin crash, suggesting a buying opportunity.

However, before investors place their trust in the Mayer multiple, it would be good to see how the prices of gold and Bitcoin correlate. We also explain how the price of silver can predict Bitcoin’s next move.

At the heart of this opportunity is the bullish indicator from the BTC/Goldmayer multiple, so it would be good to know how it turned out.

Entrepreneur and financial scientist Trace Meyer created the multiple to track Bitcoin’s historical price movements and discover trends and buying opportunities.

It is the current price of Bitcoin divided by the 200-day moving average.

For example, if Bitcoin is currently trading at $120,000 and its 200-day moving average price is $100,000, the Meyer multiple for that Bitcoin is 1.2.

Typically, a ratio above 2.4 indicates Bitcoin is overbought, while a Mayer multiple of 0.8 tends to suggest an attractive buying opportunity.

You can further complicate the Mayer multiple by comparing the ratio of two assets, such as Bitcoin and gold, as User X did.

Like other indicators, Mayer multiples rely on lagging indicators and historical patterns to predict future price movements.

How gold and silver prices affect Bitcoin

When the price of gold or silver rises faster than Bitcoin over an extended period of time, it often indicates that Bitcoin may be gearing up for a rebound.

This relationship is captured by the BTC/Gold Meyer multiple and the BTC/Silver Meyer multiple. Both of these indicators measure price performance against Bitcoin’s 200-day moving average for these metals.

a Mayer multiple less than 1 This means that Bitcoin is undervalued compared to gold and silver. Historically, these moments have presented strong buying opportunities.

Figure 1: BTC/Gold Meyer Multiple over the past 5 years. Values ​​below 1 (dashed line) historically indicate major accumulation stages for Bitcoin.

for example:

• The BTC/Goldmayer multiple fell to 0.70 in November 2022 and 0.85 in March 2020, both near the bottom of the Bitcoin market. In the months that followed, Bitcoin’s price more than doubled.
• The BTC/Silvermayer multiple fell below 1 in September 2020, when Bitcoin was around $10,900, but soared to nearly $60,000 by April 2021. It fell below 1 again from the end of 2022 to the beginning of 2023, and Bitcoin almost doubled in the same year.

BTC/Gold ratio has increased recently 0.84 And the BTC/Silver ratio temporarily fell below 1 In late October. Even a small drop below this threshold, e.g. 0.98 In past cycles, it has proven to be a strong entry point for long-term investors.

So, historically, when the ratio of Bitcoin to precious metals falls below 1, “Buy on the edge” window before the big rally.

Figure 2: BTC/Silver Mayer Multiple showing a similar undervaluation signal. Each decline below 1 (dashed line) occurred prior to a major Bitcoin rally.

What gold and silver prices mean for Bitcoin

Currently, the Mayer multiples for both gold and silver are bullish outlook In the case of Bitcoin. The idea is simple. When precious metals outperform Bitcoin for an extended period of time, Bitcoin tends to catch up and then dramatically outperform.

This year so far, Gold up 54%, Silver rises 63%and Bitcoin rises 21%. If history repeats itself, Bitcoin could soon close the gap and deliver big gains in the coming months.

In the long term, Bitcoin’s performance shows that it is on the rise. Over 700% in the last 5 yearswhile gold and silver are approximately doubled.

Beyond the Mayer multiple signal, macro conditions also support Bitcoin’s upside. Lower interest rates, pro-crypto policies, and an increase in institutional investors are creating the right conditions for Bitcoin to outperform again.

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