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LINKS FOR ADDITIONAL READING FOR THIS VIDEO & ALL INFO IN TEXT DOWN BELOW
Trace Mayer: https://www.tracemayer.net/
The Mayer Multiple: https://www.theinvestorspodcast.com/bitcoin-mayer-multiple/
Compare Other Pricing Models: https://seekingalpha.com/article/4191353-bitcoin-pricing-models-round-2?page=2?referrer=https://seekingalpha.com
Moon Math: https://www.moonmath.win/
For many people, the first step to being introduced to Bitcoin, I mean really introduced, is by purchasing bitcoin. It doesn’t matter if you are a high roller and purchased an entire bitcoin, or if you only dipped a toe in and purchased something like five or ten dollars worth, the chances are very likely that you mostly cared that your investment would increase over time. The chances are even more likely that you’d prefer that investment to increase in a short amount of time.
There’s no doubt that people in this space are desperate to get their hands on any kind of information that will lead to their investments’ increase in value. That being said, here is one tool that could help you get a better idea of when is a good time to buy or sell your bitcoin.
There are many pricing models that you can use to determine if bitcoin is over or under priced. I will list them at the end of this video for those of you who are interested. In fact, I encourage you all to research many of them so you can have a well-rounded understanding of how each of them differs and why. For the purposes of this video, and in order to keep this one succinct, I’ll be focusing on the Mayer Multiple. It is a pricing model developed by Trace Mayer. For those who may not know, Trace was one of the first to spread the word about Bitcoin and blockchain technology and continues to be a prominent voice in the space that advocates for monetary sovereignty for all.
Trace came up with a method for determining the most beneficial timing for purchasing bitcoin. It’s called the Mayer Multiple and to put it in a very basic way, it’s calculated by dividing the current price of bitcoin by its 200-day moving average.
Key factors of the Mayer Multiple to be aware of:
* It is affected by the rate of change of the bitcoin price, you can see this when viewing the data for the bitcoin bubbles of 2012 and the most recent pop in 2017.
* Uses a 200 DMA- meaning it doesn’t take into account data older than 200 days.
* Uses strict TA (technical analysis)- meaning it does not account for outside influences (like Bitcoin ETFs)
Many of these types of models reference Metcalfe’s Law. There is a lot to be said and learned from thanks to graphs depicting Metcalfe’s law. This law certainly demonstrates how the network effect has played a role in the price movements of Bitcoin in the past. It’s something that is deserving of your attention as we move forward with this new technology.
If this one sparked your interest, I’ve posted links for more information about the Mayer Multiple and along with some other models you should explore.
Of course, I can’t make a video about this topic without the friendly reminder that buying and hodling works as well.