Anyone who trades or invests in Bitcoin on a long-term basis would like to know how their investment is developing. Even if the future is uncertain, ideas can be viewed with a glance at past price developments. TradingView offers a very extensive toolbox for this backtesting.
Some time ago, an indicator called the Mayer multiple was discussed in our community chat. This indicator looks at the relationship between the price and the moving average over the last 200 days.
For Bitcoin the whole cryptosoft thing looks like this:
We see that this
cryptosoft distribution oscillates and gives the impression of a Bitcoin development pressed onto a smaller
cryptosoft </a> scale.
This measure was presented as part of a trading strategy by the makers behind the Investors podcast. In their presentation, the Mayer multiple is used as a decision aid for a Bitcoin purchase. According to her explanations, as long as the Mayer multiple of Bitcoin is below a value of 2.4, the position should be bought and sold at values greater than or equal to 2.4.
This sounds quite interesting, but one would like to check such claims – if possible without risking one’s own money. With the price development of Bitcoin over the last few years, interested parties also have enough data to test such hypotheses. The question now is how to do this.
TradingView – the tool for backtesting
Our price analyses are carried out with TradingView. In a tutorial we introduced the basic work with this tool. However, you can analyze much more than charts with TradingView. In the bottom line there is a tab bar with terms like “Screener”, “Text Notes”, “Pine Editor” and “Strategy Tester”:
Today we are interested in the “Pine Editor” and the “Strategy Tester”. We plan to test the above mentioned thesis. For this purpose, a strategy is to be implemented according to which Mayer multiple values below 2.4 are to be bought, while the position is sold from a value of 2.4 onwards. In addition, Bitcoin is to be bought only on the first of the month. This is to simulate the investor who wants to invest part of his salary in Bitcoin. Finally, we assume that our model investor has been investing in Bitcoin since early 2016.