The Mayer Multiple and Block Subsidy Models help price Ethereum.
The Block Subsidy model shows that Ethereum is middle of its bands.
The Mayer Multiple model shows extreme undervaluation for Ethereum.
The two previous Ethereum (ETH) market cycles have been similar in many respects. One is that the ETH price moved well above its moving averages and thermocap near its top. The opposite was true at the bottom.
The Mayer Multiple and Block Subsidy models can help visualize the price’s position relative to the indicators. Let’s analyze them and see how Ethereum fares.
Block Subsidy Model
The Block Subsidy Mode estimates the value of an asset by comparing it to the price of an asset to the cost of production for its supply, otherwise known as the thermocap.
The Block Subsidy Model uses multiples of the thermocap to show how much the asset’s value exceeds its production cost.
Historically, Ethereum bottoms (black circles) have reached values twice as high as the thermocap while tops at values 32 to 64 times higher (red circles).
However, the current cycle has been different. The July 2022 bottom was at the 4x thermocap line (green), and the price has not even reached the 16x thermocap line (yellow).
This is different from the previous cycles, when ETH reached the 32 and 64x thermocap lines, respectively.
According to the Block Subsidy model, the ETH price could be in the middle of its bullish trend. However, the fact that the model never visited the lower extremes of this cycle casts some doubt on its predictive powers for the current one.
Furthermore, in both previous cycles, the Ethereum price did not fall below the 8x thermo cap line once crossing it, while it has done so in the current cycle.
Mayer Multiple Model
The Mayer Multiple Model compares Ethereum’s price to its 200-day moving average (MA) to determine whether it is overbought or oversold. In previous market cycles, values above 2.4 indicated a top, while those below 0.8 signified bottoms.
The ETH price is below the 0.8 Mayer Multiple, signifying undervaluation. The current reading is similar to that of March 2020.
In that cycle, the Mayer multiple crossed over 0.8 and reached a high of 2.02 before falling under 0.8 again.
An almost identical reading has happened in the current cycle. So, if the ETH price follows a similar trajectory, it will soon begin to increase rapidly.
ETH Mayer Multiple | Credit: Valdrin Tahiri/Glassnode
So, the Mayer Multiple model suggests that Ethereum is undervalued and has not even started its bullish trend yet.
Undervalued Ethereum
Because of the lack of similarity to the previous market cycles, the Block Subsidy Model cannot be used accurately to predict the current ETH price movement.
However, the Mayer Multiple Model shows readings nearly identical to those of March 2020, shortly before the ETH price began the most rapid portion of its increase.
Disclaimer:
The information provided in this article is for informational purposes only. It is not intended to be, nor should it be construed as, financial advice. We do not make any warranties regarding the completeness, reliability, or accuracy of this information. All investments involve risk, and past performance does not guarantee future results. We recommend consulting a financial advisor before making any investment decisions.
Valdrin Tahiri is a cryptocurrency analyst and reporter at CCN, specializing in technical analysis with a focus on Elliott Wave theory, on-chain metrics, and fundamental research. He brings over seven years of experience in the crypto space as both a trader and writer.
He discovered cryptocurrencies in 2017 while earning his MSc in Financial Markets at the Barcelona School of Economics, which sparked a deep interest in blockchain and market dynamics. Since then, he’s contributed to top crypto outlets like BeInCrypto and CoinGape.
Valdrin also served as Community Manager of BeInCrypto’s Telegram group for three years, helping grow it into one of the largest crypto communities worldwide. His expertise in market structure and price patterns allows him to break down complex trends into clear, actionable insights.
He’s published thousands of articles covering altcoins, Bitcoin cycles, and macro trends.
