Bitcoin’s trademark volatility was for years treated as both its greatest feature and its biggest flaw. Recently, that roller coaster has quieted into something resembling a smooth ride, with volatility collapsing to roughly 35 from a high of 120 in 2021. While critics view this dampening as a sign that the asset is losing its edge, longtime bitcoin investor and Mayer Multiple creator Trace Mayer argues they are drawing entirely the wrong conclusion.
Mayer suggested that bitcoin’s declining volatility isn’t a sign of weakness, but rather a direct reflection of its growing economic substance in an interview with CoinDesk.
“Gary Gensler said he was going to ‘tame bitcoin,'” Mayer said, pointing to regulatory efforts to corral the digital asset. “And we’ve seen the volatility come down.”
Rather than viewing this “taming” as a defeat, Mayer sees it as confirmation of bitcoin’s massive institutional adoption. The market has simply become too big to move as erratically as it once did. “The barbell is getting heavier,” Mayer noted, using a vivid analogy for the market’s liquidity. “It’s not a 50-pound weight anymore. It’s a 2,500-pound weight.”
This heavy structural shift is being driven by the sophisticated mechanics of the options market, specifically call-selling, according to Mayer. As institutions and digital asset companies increasingly sell covered calls against their bitcoin holdings to generate upfront premium income, they inadvertently create a dampening effect on price swings.
Because these entities essentially agree to sell their bitcoin at a predetermined price in the future, market makers on the other side of those trades are forced to actively hedge their positions. When the price of bitcoin ticks upward, these market makers sell the asset to balance their risk, effectively creating a natural, structural ceiling on price spikes. The result is a more mature, predictable asset—one that is growing up right in front of the market’s eyes.
“When you’re able to come in and sell call volatility into the market, the market makers are going to have to do negative delta,” Mayer said. “That negative call wall is like adding weight on the barbell. The price doesn’t necessarily go up, but the total economic substance of that asset has increased.”
The Mayer Multiple
Mayer created the Mayer Multiple ratio eight years ago that divides bitcoin’s current price by its 200-day moving average, a long-term trend line that smooths out short-term noise. A reading above 1 means bitcoin is trading above its long-term average, below 1 means it’s trading beneath it. Historically, readings above 2.4 have coincided with market tops, while readings below 0.8 have signalled attractive entry points.
Bitcoin is currently just below its long-term trend at 0.94. Mayer notes that crucially the standard deviation bands the statistical range within which price typically moves have compressed significantly as more trading history accumulates.
On a five-year lookback, one standard deviation above the mean sits around 1.3, two standard deviations at 1.6, and three at 2.13. Compare that to earlier periods drawing on data back to 2011, where price regularly reached far more extreme multiples.
In other words, the instrument is maturing in the same way any asset does as it attracts deeper, more disciplined capital.
Mayer started selling physically-settled bitcoin call and put options as far back as 2017 on LedgerX, one of the first federally regulated crypto derivatives exchanges.
Today that market has expanded dramatically from leveraged ETFs like BITX, to Strategy’s (MSTR) equity, to bitcoin appearing on corporate balance sheets like SpaceX’s reported 18,712 BTC holding.
Mayer argues lower volatility is positive for bitcoin because it reflects the asset graduating from a speculative instrument into something that investment committees, family offices, and corporations can actually underwrite. “In order to get that buy-in, you kind of have to have something that’s really boring, like gold,” he said. “Gold is so boring — and that’s what we need.”
He pointed to attendance at conferences as a tangible signal of that maturation. His blog was running in 2008 before Bitcoin existed, and he regularly presented at major gold conferences that drew 2,000-3,000 attendees. “We had tens of thousands at conferences this year and much more last year. It’s a real industry. It’s a real reserve asset.”
Mayer acknowledges risks to bitcoin, such as weakening network security should BTC’s price not appreciate enough to keep enough miners in business. Quantum is another potential longer-term threat, should quantum computers become sufficiently powerful to crack Bitcoin’s cryptographic keys. Mayer acknowledged the concern but noted that Bitcoin’s standing bounty for finding a catastrophic exploit has so far gone unclaimed, and pointed to the backwards compatibility of proof-of-work as a structural resilience.
Despite the risks, Mayer remains firmly in the bitcoin-over-gold camp for the next 15 years. “With gold, higher prices bring more supply. That’s not the case with Bitcoin and we don’t know what technologies might pose a threat to gold’s dominance. We could have asteroid mining. AI robots scouring the oceans. But we know Bitcoin is going to be 21 million.”