The tumultuous era of Bitcoin appears to be in the past, and Trace Mayer views this as a positive development. The Mayer Multiple creator contends that the increasing economic significance of Bitcoin is leading to reduced volatility and drawing in more substantial investments.
What to know:
— Bitcoin’s volatility has decreased from approximately 120 in 2017 to 35, as institutional engagement and options markets contribute stability to the asset.
— Mayer asserts that diminished volatility enhances Bitcoin’s appeal for corporations, family offices, and institutional investors.
— Despite ongoing concerns regarding miner security incentives and the potential impact of quantum computing, Mayer remains optimistic about Bitcoin’s capped supply of 21 million compared to gold.
In an interview with Decryptnews, Mayer suggested that the decline in Bitcoin’s volatility is not indicative of weakness but rather a clear sign of its growing economic foundation. «Gary Gensler mentioned he would ‘tame Bitcoin,'» Mayer remarked, referring to regulatory attempts to manage the digital asset. «And we have observed a reduction in volatility.»
Instead of perceiving this ‘taming’ as a setback, Mayer interprets it as evidence of Bitcoin’s extensive institutional uptake. The market has simply grown too large to fluctuate as wildly as it did previously. «The barbell is getting heavier,» Mayer illustrated, using a striking metaphor for the liquidity in the market. «It’s no longer a 50-pound weight; it’s become a 2,500-pound weight.»
According to Mayer, this significant structural change is driven by the intricate mechanisms of the options market, particularly call-selling. As institutions and digital asset firms increasingly sell covered calls against their Bitcoin holdings to earn upfront premium income, they unintentionally create a stabilizing effect on price variations.
Since these entities essentially commit to selling their Bitcoin at a set price in the future, market makers on the opposite side of those transactions must actively hedge their positions. When Bitcoin’s price rises, these market makers sell the asset to mitigate their risk, effectively establishing a natural cap on price surges. The end result is a more mature, predictable asset—one that is evolving right before the market’s eyes.
«When you can enter the market and sell call volatility, market makers will have to engage in negative delta,» Mayer explained. «That negative call wall acts like adding weight to the barbell. The price may not necessarily increase, but the overall economic substance of that asset has grown.»
The Mayer Multiple
Mayer introduced the Mayer Multiple ratio eight years ago, which divides Bitcoin’s current price by its 200-day moving average—a long-term trend line that smooths out short-term fluctuations. A value above 1 indicates Bitcoin is trading above its long-term average, while below 1 indicates it is trading below it. Historically, values exceeding 2.4 have aligned with market peaks, while values below 0.8 have indicated favorable entry points.
Currently, Bitcoin is just under its long-term trend at 0.94. Mayer highlights that the standard deviation bands—the statistical range in which price typically operates—have significantly narrowed as more trading history has accumulated.
Looking back over five years, one standard deviation above the mean is around 1.3, two standard deviations at 1.6, and three at 2.13. This is in stark contrast to earlier periods, drawing on data dating back to 2011, when prices frequently reached much more extreme multiples.
In essence, the asset is maturing similarly to how any asset does as it draws in more profound, disciplined capital.
Mayer began trading physically-settled Bitcoin call and put options as early as 2017 on LedgerX, one of the pioneering federally regulated crypto derivatives exchanges.
Today, that market has expanded significantly, encompassing leveraged ETFs like BITX, Strategy’s (MSTR) equity, and Bitcoin appearing on corporate balance sheets, such as SpaceX’s reported 18,712 BTC holdings.
Mayer argues that reduced volatility is advantageous for Bitcoin, as it signifies the asset’s transition from a speculative tool to something that investment committees, family offices, and corporations can genuinely endorse. «To achieve that acceptance, you need something that’s truly mundane, like gold,» he said. «Gold is incredibly dull—and that’s precisely what we require.»
He pointed to the turnout at conferences as a concrete indicator of that maturation. His blog was active in 2008 before Bitcoin was created, and he frequently presented at major gold conferences that attracted 2,000-3,000 participants. «We had tens of thousands at conferences this year and many more last year. It’s a legitimate industry. It’s a true reserve asset.»
Mayer recognizes the risks associated with Bitcoin, such as a potential decline in network security if BTC’s price does not rise sufficiently to sustain enough miners in operation. Quantum computing represents another possible long-term threat, should quantum machines become advanced enough to breach Bitcoin’s cryptographic keys. Mayer acknowledged this concern but pointed out that Bitcoin’s standing bounty for discovering a catastrophic flaw remains unclaimed, and noted the backward compatibility of proof-of-work as a form of structural resilience.
Despite the risks, Mayer firmly supports Bitcoin over gold for the next 15 years. «With gold, higher prices lead to increased supply. That’s not the case with Bitcoin, and we are uncertain about what technologies might threaten gold’s supremacy. We could see asteroid mining or AI robots exploring the oceans. However, we know Bitcoin will remain capped at 21 million.»