Bitcoin Hits Golden Fibonacci Extension of Last Bull Run

Bitcoin just touched a major level – the 1.618 golden Fibonacci extension of its last bull market. It popped just above it earlier this week, but is now trading back below it. So far, the golden Fib has “rejected” bitcoin from running higher. Here’s what it means. 

What is the golden Fibonacci extension?

The chart shows two bitcoin bull runs. In the first (white), bitcoin gained $65,872 from its 2018 low to its 2021 high. In the second (gold), I’ve used that same move to plot a 1.618 Fibonacci extension. Multiply the first bull run by 1.618 (that’s $106,581), then add it to the 2022 low of $15,479. That gives a target of $122,060 – which bitcoin just hit.

The 1.618 level comes from the golden ratio – a number that appears all over nature. For example, look at a seashell. As the shell grows, it expands in a spiral – and the ratio between each spiral’s size is about 1.618. That same spiral shows up in pinecones, flower petals, even hurricanes. It’s a pattern of natural growth and proportion.

It can be a pattern in financial markets as well. After a big price move, technical traders measure how far the next move might extend using Fibonacci ratios. And many of them use it as a major profit taking point. That’s why the price often rejects at the golden Fibonacci extension – at least when it hits it for the first time.

Sure, bitcoin could eventually break the golden Fibonacci and move higher this bull run. But if you’re into superstition, maybe go easy on the leverage.

To get the fully up to speed with Fibonacci extensions, grab our free Fibonacci PDF guide below: