Why are traders using that magical number 1.618?

The “Hidden Rules” in the Crypto Assets Market

In the coin circle, you may have heard traders mention Fibonacci, support levels, and resistance levels, but few people know that these concepts actually point to the same thing: golden ratio. This ratio is approximately 1.618, which sounds mysterious, but its frequency of occurrence in the crypto assets price trends is a bit ridiculous.

Analysts have found that the price fluctuations of Bitcoin and Ethereum often show support or resistance at specific mathematical ratios. They believe that this is not a coincidence, but rather a reflection of market psychology.

From Nature to Market Trends

The golden ratio (represented by the Greek letter φ) has fascinated mathematicians, artists, and scientists for centuries. Its definition is simple:

φ = (a + b) / a = a / b

In other words, when a line is divided into two segments, the ratio of the longer segment to the shorter segment is equal to the ratio of the total length of the two segments to the longer segment—this is the number 1.618.

This number is everywhere in nature: the spiral of shells, the branching of trees, the proportions of the human body. If nature follows this rule, then what about the market driven by human psychology?

Traditional finance has been using it for a long time

Long before the emergence of Crypto Assets, stock and forex traders were already applying proporção áurea. They identified potential rebound points or signals for continued declines through Fibonacci retracements.

The reason why the 61.8% retracement level is considered crucial is that it directly corresponds to the golden ratio. When the price rises and then retraces, traders pay attention to this ratio position to determine whether it will continue to fall or rebound upward.

New Tools for Crypto Assets Analysts

In the crypto assets circle, this set of methodologies has been directly adopted. Analysts draw Fibonacci grids on candlestick charts to look for possible support and resistance levels.

The logic of this approach is: if enough traders are watching the same golden ratio level, then these positions naturally become real buy and sell points—a self-fulfilling prophecy.

The Combination of Tools and Theory

In the practice of technical analysis, Fibonacci Retracement is not only an application of an ancient mathematical concept but has also become a core tool of trading strategies. Traders use this tool:

• Mark potential support levels in an uptrend
• Identify resistance areas in a downtrend
• Plan entry and exit points
• Evaluate the risk-reward ratio

A 61.8% retracement is always considered the most valuable reference point.

But is this science or religion?

The key question is: how effective is the golden ratio in the Crypto Assets market?

To be honest, this issue is still a matter of debate among analysts. Some believe it is a real mathematical law, while others think it is just confirmation bias—people tend to remember when predictions are correct and forget when they are wrong.

But there is one thing that is beyond doubt: whether it is stocks, futures, or Crypto Assets, the golden ratio and Fibonacci tools have profoundly influenced the decision-making process of market participants. If enough people believe in it, it becomes a real force that affects prices.

Summary

From shells to brains, from the Parthenon to Bitcoin candlesticks, the golden ratio seems to be some kind of code of the universe. In the Crypto Assets market, this magical number 1.618 provides traders with a rational decision-making framework through tools like Fibonacci Retracement.

Whether you believe it or not depends on yourself - but at least in the market, there are already enough people who believe.