The movement of the price of Bitcoin is difficult to predict in the range of only a few days, let alone when it comes to longer time intervals. The main reason for that lies in the high volatility of this most traded cryptocurrency, which is why, among other things, it has become a favorite refuge of investors in high-risk assets, which achieve higher returns in smaller units of time with also higher chances of failure.
Bitcoin value at the time of writing is around $ 58,672 and is very close to the record of $ 61,556. However, many analysts, whether real or self-proclaimed, are racing these days to notice some regularities and predict trends in the movement of Bitcoin values. Is that even possible? Sometimes its price rises alongside shares on Wall Street, but sometimes it does not. It also happens that there are frenzy purchases of small investors due to some instant and passing trend, such as in the recent case of GameStop shares (the US video game, consumer electronics, and gaming merchandise retailer), which have been subject to extreme volatility over the past few months.
Who First Came up With the Idea to Use the Fibonacci Sequence for Bitcoins?
Jen Wieczner from Fortune Magazine claims that the pattern of Bitcoin growth can be determined using one of the most famous mathematical series, which nature itself uses in its creation. It is the Fibonacci sequence, which has also gained great popularity among gamblers because it gives them the opportunity to make more profit in the short term by playing in casinos that offer a large selection of table games and can be found by the link.
The sequence of numbers that realized in many physical and biological phenomena, and in which the sum of the previous two numbers gives the value of the next member of the sequence, seems to be applicable to the price curve of the most famous digital token.
Wieczner notes that JC Parets, a technical market analysis expert who has also led a research service called All Star Charts in the past decade, found a way to apply this pattern to Bitcoin back in 2017. He then noticed exactly when Bitcoin would reach values of $ 6,500 and then $ 7,400, which was an exceptional result at that time.
Parets saw this by analyzing the previous movement of Bitcoin prices into individual segments. After the fall, if the price then recovered by 62 % and continued to recover to an earlier maximum, the assumption is that it will additionally jump to 162 % from the previously reached minimum in that particular segment. After that, if Bitcoin does not return to the previous level, it will probably increase to almost 262 % from the last lowest value shown, i.e. the lower amplitude on the growth chart (because 262 is the sum of the previous two percentage values: 100 + 162 = 262). Later, Parets successfully applied this discovery to the prediction of reaching the limit of $ 30,000 and then $ 45,000, and now he predicts a soon crossing over the line of $ 70,000.
Conclusion – There Is No Logical Explanation for the ‘Behavior’ of Bitcoin
However, although they notice these patterns in the ‘behavior’ of the price, neither Parets nor Wieczner still have any logical explanation why they actually happen. Parets claims that, in addition to that, as many as several hundred investment companies and funds included the monitoring of the Fibonacci sequences in their predictions on the movement of the value of Bitcoin, in addition to various other market parameters that they otherwise monitor.
The Fibonacci sequence is a sequence that nature uses in biological growth and is especially easy to spot in plant species. Graphically, it can also be seen as a form of fractal growth, i.e. such that one of its isolated parts is a smaller copy of the whole.
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