Bitcoin and other assets often develop support and resistance around it Fibonacci levels, either through extensions or regression. The ratios are based on the Fibonacci sequence, which has links with the golden ratio.
With the top cryptocurrency tied to mathematics, the golden ratio can provide clues as to where Bitcoin is in the most recent market cycle, and whether a bottom has been set.
Cryptocurrency and mathematics: more than just symbols and geometric shapes
The Bitcoin code is built entirely on mathematics, its distribution protocol is steeped in mathematics, and everything else is about it. scarcity of supply 21 million bitcoins It is halved every four years, and often the sum of the event is an imbalance between supply and demand in favor of higher prices.
Even chart patterns and Technical Indicators It’s a little more than math – geometric shapes are hand drawn and statistics represented through graphical overlays and oscillators.
Related reading | Fibonacci Day: How to Use Math to Trade Cryptocurrencies
But can math also be used to find the tops and bottoms of bitcoin? Among the most accurate tools for picking the top of each market cycle is called Pi Cycle . indicator It is based on the mathematical constant. According to one trader, the golden ratio is how to find the bottom of Bitcoin on its way higher during a bull market.
The crypto asset has historically retraced to the 1.618 Fibonacci ratio | Source: BTCUSD on TradingView.com
How the Golden Ratio could act as a bottom for Bitcoin before new highs
According to the analyst with a pseudonymAfter fully recovering to the 1.0 Fibonacci ratio and breaking above it, Bitcoin explodes through the 1.618 golden ratio, only to be retested later. Its retest led to the last major correction before the last bullish wave that took the cryptocurrency to the top of its original cycle.
Other tools related to mathematics are called the apex of the cycle, as mentioned above. However, The creator of the tool says The crossover was achieved to give the signal very narrowly, leaving room for another cycle top a few months later.
Related reading | Math puzzle: Why did the Bitcoin rally stop at the golden ratio?
Bitcoin price is trying to hold near $40K after a deep drop to $30K and one of the worst monthly selling ever. But this sale is gone The right to the golden ratio It has also happened to cryptocurrency during recent market cycles and each time it has been for the downside.
Not only did emerging digital assets reclaim highs, they grew another 500% from their lows. As we now know, the math is rarely wrong when it comes to cryptocurrency, and another similar rally would take the Bitcoin price over $100,000 each. Currency.
Featured image from iStock Photos, Charts from TradingView.com