Spiral Out – Using the Golden Ratio and Fibonacci Sequence to Predict Bitcoin Price Cycles
Bitcoin, the main crypto asset, saw its value drop more than 53% from its all-time high above the $ 64,000 grip, slipping to a low of $ 30,000 on May 19. While bitcoin is still down 25% over the past 30 days, it’s hard to predict where bitcoin’s value is going from here. Although a number of people take advantage of indicators such as the golden ratio multiplier, Fibonacci sequence, logarithmic growth charts, and tools such as the infamous stock-to-flow price model ( S2F) to predict future bitcoin valuations.
Predict Bitcoin Booms and Busts with the Phi Number
Most people cannot predict the future and when it comes to Bitcoin (BTC) and the crypto-economy, in general, as crises and booms are common. In addition, often crises and booms are unpredictable, except on a few occasions such as specific news stories that rock investors. However, there is a plethora of technical analysis tools, charts, and models that help a lot of people get ahead of the curve.
For example, technical analysis enthusiasts benefit from the perspective of gold number and Fibonacci sequence in order to predict future Bitcoin valuations. Essentially, a trader will apply the math to things like the value of bitcoin and moving averages. The golden ratio is also known as the divine section, divine proportion, phi number, extreme and average ratio, and golden ratio. Essentially in the “science of quantity”, two quantities reach a divine mathematical section when their ratio is equal to the ratio of their sum to the greater of the two quantities.
The golden ratio is equal to 1.618 and it is not only used in mathematics, but it also appears in architecture, geometry and many natural elements. Then there is the classic mathematical example called the Fibonacci sequence, which is a sequence of quantities where a number is the addition of the last two quantities, starting with 0 and 1. The Golden ratio multiplier hosted on lookintobitcoin.com gives a detailed description of how the multiplier works with the main crypto asset Bitcoin (BTC).
“Bitcoin’s adoption curve and market cycles to understand how price can behave in the medium to long term,” the website notes. “To do this, it uses multiples of the 350 day moving average (350 DMA) of the price of Bitcoin to identify areas of potential resistance to price movements.” Lookintobitcoin.com adds:
The multiples are the price values of the 350DMA rather than its number of days. Multiples refer to the golden number (1.6) and the Fibonacci sequence (0, 1, 1, 2, 3, 5, 8, 13, 21). These are important mathematical numbers. These specific multiplications of the 350DMA have been very effective over time in determining intracycle highs for the price of Bitcoin as well as major highs in the market cycle.
The golden ratio multiplier, as applied to bitcoin price predictions, was summoned by Philip Swift when he published an article on the subject on June 17, 2019. The item titled, “The Golden Ratio Multiplier: Unlocking the Mathematically Organic Nature of Bitcoin Adoption,” helps a trader gain more perspective on multi-year cycles.
The article begins by noting how the 350-day moving average acted as an axis for major Bitcoin market cycles – once we erupted, a new one BTC the bull run begins, ”Swift tweeted two years ago. Swift went on to say:
The new perspective begins when this important moving average is multiplied by key numbers: the golden ratio (1,618) and the Fibonacci sequence numbers (1,2,3,5,8,13,21). By doing this, we are able to spot almost every major intracycle price peak in Bitcoin history (colored lines) AND every market cycle peak (dotted lines). See the 2015-17 bull run as a clear example of MA multipliers acting as major resistance to intracycle highs.
Bitcoin’s digital sequence like Fibonacci poetry and Nautilus shells
Of course, not everyone agrees with using the golden ratio and Fibonacci sequence to predict bitcoin busts and booms. For example, Alvaro Fernández of the open insurance platform Nsure Network Note: “Historically it seemed to be respected, but how much could you trust him? You might as well go through the first peak of accumulation. Other critics believe that using the golden ratio and Fibonacci sequence is no different from using tarot cards.
Despite skeptics, Swift’s Bitcoin tool, the Golden Ratio Multiplier, is well respected and used by a myriad of technical analysts. The golden ratio has been used since the days of the ancient Greeks and many believe that it is deeply associated with the universe and nature. Similar to the golden ratio, The invention of Satoshi Nakamoto is renowned technology and irrational by design. Interestingly, bitcoin’s epic rise in price since it was first traded has closely followed phi and Fibonacci number sequence patterns.
Much like the golden ratio multiplier, the leading asset succinctly followed a “natural long-term growth corridor of the power law”, according to Harold Christophe Burger. Burger posted a full article which deals with logarithmic growth curves of bitcoin. Like Swift’s Golden Ratio Multiplier, log growth charts can also give a trader an idea of when to expect specific dips and booms and time frames. But these tools would have been occasionally demystified and the golden ratio is often considered a fairy tale.
Similar to the Nautilus shell, the price of bitcoin has often been associated with the golden ratio and the Fibonacci sequence. The Nautilus shell is often compared and associated with the golden ratio, but research against the grain and other considerations say that the famous shell shape is not a good example of the logarithmic golden ratio spiral found in nature. Studies show that the Nautilus shell has phi proportions but follows a 4: 3 ratio.
What do you think of using the golden ratio and the Fibonacci sequence to predict future bitcoin prices? Let us know what you think of this topic in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons, lookintobitcoin.com,
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