Today I would like to look at the Golden Ratio indicator and its effectiveness in minding
mid and end-cycle points.
Bitcoin is approaching some key areas on the charts where the price either reverses and
corrects or heads to unprecedented levels, such as $90,000 to $100,000.
Arguably this work is due to herd behavior as humans and also the strange
phenomenon of mathematical structures that repeat themselves in financial
markets.
The Golden Ratio Multiplier is an effective tool because it can demonstrate when the
market is likely overstretched within the context of Bitcoin's adoption curve growth
and market cycles.
Assuming the Fibonacci sequence countdown continues to play out, the 350DMA x3 will
signal the top of this coming market cycle.
Just repeat that, if this decreasing Fibonacci sequence pattern continues to play out as
it has done over the course of the past 9 years, then the next market cycle high will be
when price is in the area of the 350DMA x3.
Source: Tradingview.com
As Bitcoin becomes adopted over time, it's market cycle highs hit decreasing
Fibonacci sequence multiples of the 350DMA.
This is because the explosive growth of Bitcoin on a logarithmic scale is slowing over
time.
The big question therefore is where exactly is the 350DMA x2 and the 350DMA x3
currently located concerning the current Bitcoin price.
Source: Bitbo.io
If we look at the Golden Ratio Multiplier courtesy of Bitbo.io
chart we can see that the 350DMA x2 currently sits around the $65,500
area.
Using the same charting provider the 350DMA x 3 Golden Ratio
Multiplie sits around the $93,000 area. Just to repeat, this is the possible
market cycle top for Bitcoin if the ratio is to be believed.
Source: Tradingview.com
Tradingview.com has a number of interesting Golden Ratio tools, and perhaps the most
famous one is the Golden Ratio Top Detector indicator.
This indicator seemed to identify the previous market high and largely works on the same
principles of 350DMA x3.
Currently, the same indicator is concurring very closely with the Golden Ratio
Multiplier from Bitbo.io, with the x2 ratio at $67,200 and the x3 ratio coming out close
to the $100,000 level.
Source: Tradingview.com
Using simple trading logic we can say that traders who went long at $20,000 could make
5X gains with the $100,000 Golden Ratio target, the traders who went Long at the
important $32,000 breakout in 2023 would achieve 3X, and the Longs from the recent
$44,500 breakout in February would achieve X2.
Using the previous cycle as an example, if one had bought the breakout at the 350DMA and
then taken profit the first time the price reached the x1.6, the x2, and the x3, buying
back lower each time, that would have been a very successful investment strategy.
Overall, the Golden Ratio Multiplier will be a useful investment tool in this market
cycle for identifying areas of take-profit as price approaches the multiplier levels of
350DMA x1.6, x2, and x3.
