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Bitcoin: Crack-Up Boom Will Force The Breakout

Florian Grummes profile picture
Florian Grummes


  • The so-called crack-up boom is pushing all markets nominally higher.
  • Bitcoin is consolidating within a bullishly ascending triangle.
  • The breakout above $10,000 seems to be only a questions of time.
  • In a US election year, Bitcoin has shown itself to be quite strong.
  • Gold and bitcoin are the complementary unit of true safe haven for the 21st century.

Bitcoin (BTC-USD) and prices of Grayscale Bitcoin Trust (OTC:GBTC) as well as Winklevoss Bitcoin Trust ETF (COIN) have recovered quickly from the coronavirus crash and are now poised to breakout and above the resistance zone around $10,000.

Slowly but surely, Bitcoin is moving into the mainstream with Paul Tudor Jones publicly announcing that he holds nearly 2% of his assets in Bitcoin. The reason is simple: While central bankers around the world are quantitatively easing their fiat Ponzi schemes, Bitcoin has just recently experienced its third quantitative hardening (halving)! Looking at macro data as well as technical charts, it is obvious that the crack-up boom will force the breakout.


In the last four weeks, Bitcoin repeatedly bounced off the resistance zone around the psychological level of $10,000. At the same time, a series of higher lows has formed, as the respective pullbacks have been bought back at higher levels. Overall, prices for one Bitcoin have thus been consolidating around the $10,000 mark since the end of April. Basically, this consolidation is bullish. The overbought situation due to the V-shaped recovery following the corona crash has so far been worked off with a sideways consolidation on high levels. A breakout above $10,000 still has a significantly increased probability.

Technical Analysis For Bitcoin

Bitcoin Weekly Chart as of June 9th 2020, Source: Tradingview

After the sharp drop at the beginning of the Corona crisis, Bitcoin quickly recovered to pre-crisis levels and regained its long-term upward trend-line. However, between $10,000 and $10,500, the bulls hit a strong resistance zone. For example, the 61.8% retracement of the entire downtrend since last summer sits around $10,048. Also, and probably even more importantly, the downtrend line since the all-time high in December 2017 is waiting in this zone too! Depending on which highs you connect, Bitcoin has either already crossed this downtrend line or is about to do so or

This article was written by

Florian Grummes profile picture
Florian Grummes is an independent financial analyst, advisor, consultant, trader & investor as well as an international speaker with more than 25 years of experience in financial markets. Via Midas Touch Consulting he is publishing weekly gold, silver, bitcoin & cryptocurrency analysis for his numerous international readers. Florian is well known for combining technical, fundamental and sentiment analysis into one often accurate conclusion about the markets. www.midastouch-consulting.com

Analyst’s Disclosure: I am/we are long BTC-USD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (84)

BeneGesserit profile picture
Purchases in the grayscale trusts set records yesterday. The bitcoin trust picked up 4,474 BTC (about 5 days worth of mining) and passed the mark for 2% of all BTC supply.

The ethereum trust picked up 40,501 yesterday ETH which represents about 3 days of new supply. Since the beginning of the month the trust has grown from 1,397,021 ETH to 1,609,562. Its interesting to see such intense, but quite for now, accumulation.
jimbo162 profile picture
Looks like VISA, FB, Paypal and others want in too....this is just the beginning...www.coindesk.com/...
Good for you
Crap in one hand and expect in the other.. still got one hand full of crap and the other empty, sometimes you just can’t win...
"sometimes you just can’t win..."

Sometimes, you just can't lose.

That is currently my bitcoin situation.
crap in one hand and put bitcoin in the other.. oops, all you have is one hand full of crap...and nothing in the other, perhaps you can crap bitcoin someday, that would be an improvement or would it? Good luck with bitcoin, you’ll need it.
" Good luck with bitcoin, you’ll need it."

Thanks, but I have already had extremely good luck with bitcoin.

I expect this to continue, but not as fast as it did in '17.
Gold and silver never goes to zero, if one doesn’t keep it in a safe place, that’s their fault. Where do you keep your bitcoin?
" Where do you keep your bitcoin?"

It is in a safe place. Been there for years, and it is still there.
Oh, where is your safe place? Do you go and check on it from time to time? Is it in a vault with alarms and security ? Oh, it must be in cyberspace, just where exactly is that?
"Oh, it must be in cyberspace, just where exactly is that?"

I could show you the public code, but I don't think you would understand what you are seeing.

It is safe, it hasn't moved in many months.

Gold/silver can be stored safely also, for a cost.

No cost to safely store bitcoin however.
How much money has a central bank stolen from you? We’re talking about your money. You putting it in bitcoins along with drug dealers and other criminals. When your bitcoins are stolen it gone, no one cares it’s stolen. You may one day find your account at zero... my backup plan is gold/silver, it will never go to zero.
"my backup plan is gold/silver, it will never go to zero."

You do realize that gold/silver which is stolen also has a value of zero.

For you anyway, for the thief it is all gain.
Your money is in a system run by those you don’t know, with no recourse for you when your account is hacked, no nation cares when it’s stolen, big risk. Why do you use it? What advantage does it offer you?
Central banks and governments steal your money every year; neither care. Bitcoin gives me an alternative to the money printing addiction which has been the down fall of most civilizations. What's your excuse for not getting off zero?
You can’t discount the fact that drug dealers and other criminals love bitcoin, if you think it’s an honorable financial system and it’s best fans are honorable, think again. Just wait for your account to be hacked and lost to your fellow bitcoin buddies. Lots of risk with no recourse.
Michael Bryant profile picture
It was already proved long ago that most (over 95%) of bitcoins are not used in criminal activity. If it was, the criminals are very stupid, because everyone can see $BTC-USD's movement in real-time. We will know instantly the criminal's bitcoin account. The hard part is to know who the account belongs to. But now Coinbase and several other bitcoin exchanges gave the IRS the names of who owns the addresses. I laughed so hard when a profession hacking group hacked into the bitcoin account used to collect ransom from ransonware attacks and stole the bitcoins.

I bet criminals are now using privacy coins like monero ($XMR-USD). They could very easily transfer the bitcoin into monero. But if they use bitcoin, they have to do it carefully as to not get caught.
T3SLA profile picture
@Michael Bryant

You guys are going to sit here and argue whether Bitcoin is used for criminal purposes, and you're completely ignoring the very obvious problem. Banks and governments don't like when people can move money around outside government control. If it ever did get to the point where it was interfering with banking, the bankers would simply pay off the politicians to prohibit transactions. Those of you who own Bitcoin could trade amongst each other, but you would never be able to cash it out or use it to pay for anything. the government has the ability to prohibit regulated financial institutions from participating in things they deem "sketchy." an article today indicated a Bitcoin whale was able to move something like a billion dollars in coins to a bunch of anonymous accounts in who knows which countries. this money could be moving for criminal purposes or it could be moving to accounts to pay for countries to interfere with US presidential campaign... No one knows, and that's the problem. it will never be allowed to be anything more then a beanie baby like collectible. They sort of allow it to be a commodity of sorts, but now that you have hedge fund managers working the angles on the futures markets you will find that the volatility is completely gone. They will keep shaving nickels and dimes off of each up and down move and those of you holding for long-term gains will find 10 years from now you've gone nowhere at best.
" If it ever did get to the point where it was interfering with banking, the bankers would simply pay off the politicians to prohibit transactions."

Looking at history, gov't doesn't have a good track record at prohibiting anything. Look at "Prohibition", for an example.
USD goes down many Analyst are saying. BTC-USD get sold by foreign holders.
An expected “crack-up” as crack dealers launder drug money from crack sales. Drug dealers love bitcoin! Shit-coin rides again!
BeneGesserit profile picture
Bitcoin has a public ledger making it pretty ill suited for the drug trade. The "privacy" of the early years were only from the obscurity of the platform. Nothing was ever really private. Most drug trades worldwide are made using US $100 bills.

The crime criticism is still valid for ransom, blackmail and phishing transactions due to the irreversibility factor.
Drug dealers no longer have to take discounts when they launder money via bitcoin. They love it, shit coin will stay, it’s just what they need! Transferring huge sums in complete secret, nice!!
Mikhail_Bitcoinovich profile picture
@Captain Oblivious, you spew misinformation about bitcoin with such rabid hatred. What is it to you?
there will be a short break, because bitcoin propaganda has become more active. Better use the Crypton of the utopia ecosystem - many times more useful.
BayArea2016 profile picture
There's a lot of good ahead for bitcoin. However, the global macro issues will keep it in check for 12 months. When Fidelity, Schwab, etc. open up access to bitcoin. We will see 2X to 3X adoption into 401K's and IRA's
stonkless profile picture
Marketing strategy to acquire millennials.
Doofnut profile picture
Investors can already have bitcoin in their accounts via GBTC. If they wanted to adopt it they would have already found the way. Truth is majority of investing public don’t trust bitcoin and won’t adopt it.
Doofnut profile picture
Also, the world economic forum and world leaders at davos have publicly stated that bitcoin will eventually go to zero while the blockchain tech will live on. Look up the video on YouTube. Long term outlook for bitcoin is a shot in the dark at best.
interesting allocations ideas
What happened to the whole “bitcoin halving will skyrocket the price” peddling? Not working I see! Need a new pump scheme for this garbage.
T3SLA profile picture
It didn't happen so now we've moved on to the consolidation theory.
BeneGesserit profile picture
All the other halvings had pretty significant pullbacks before the runup months after the halving. If BTC hasn't reached a high twelve months from now, its fair to say the pattern has changed.

It looks like we might get the post halving correction now along with the broader market. Once sentiment turns and you hear Bitcoin is dead, the post halving runup isn't coming and GBTC stops trading at a premium to NAV- that's when the rally can start. A lot of bulls will feel pain and doubt between now and then.
nobody said it would happen immediately if you've been around you'd know that you are making that statement a year too early....
Mikhail_Bitcoinovich profile picture
“Markets often choose the most painful path for the largest possible number of participants. In that case, a final but sneaky sell off below the triangle support would take out most of the bulls and encourage all the bears. This extreme could then lead to a fast bounce and the breakout above $10,000. However, this scenario is not based on technical evidence but on experience.”

How prescient! That may have been what just happened with the price dipping to $8,900 and quickly springing back to $9,150 as I wrote this.

We’ll see if it hold $8,600 or tests some lower level in the $7,000 range as a few of the readers have commented here. What’s important is that after this correction, we will likely finally break the $10,500 resistance and move on to challenge the June 2019 peak, and beyond.
Mikhail_Bitcoinovich profile picture
$9,450... “fast bounce”... just as you described...
Mikhail_Bitcoinovich profile picture
Florian, as always, your articles are very thorough, and there’s always something new that I learn by reading them. I had never looked at a BTC-XAU chart before, but it makes a lot of sense!
COVID provided bitcoin with an opportunity to prove it was special, perhaps in the ranks of gold, even. Instead, the price action was decidedly pedestrian, further cementing the fact that its primary value is as a speculative commodity, and little more.

Good effort with all the charts though, OP.
Mikhail_Bitcoinovich profile picture
@animator I’m not sure how you come to that conclusion. Bitcoin has held up very well through Covid and is up 28% YTD. That’s over twice gold’s 13% rise. If you consider a 28% rise in less than six months, through a pandemic and an unprecedented closure of the planet “pedestrian”, then your return threshold is all out of whack...

If you are referring to the large drop on March 12, “Black Thursday”, that was caused by a worldwide liquidity crisis that infected all assets. It was truly a Black Swan event. And even like that, bitcoin has mostly recovered its losses since then.
hintonmj profile picture
Interesting... my ascending triangle that starts at the March bottom was broken to the downside on June 11th. I think we're headed to $7,000 around August, which would also be consistent with the seasonal observation.
Doofnut profile picture
Make it go down to 5k so the bitcoin bugs get the “halving” they were expecting.
Michael Bryant profile picture
I agree that bitcoin ($BTC-USD) will rise to $20,000+, but the comment in your conclusion is somewhat off. "Slowly but surely the economy and public life are picking up again. The pandemic seems to be on the retreat. The real economy is starting to grow again from bombed-out levels. But "normality" is still a long way off." The pandemic is nowhere in retreat on a global level. Global daily new cases is rising. www.worldometers.info/... Even in the U.S., some states are seeing a new surge and are talking about putting back stay-at-home orders. Talk is about a second wave.

$BTC-USD fell with the S&P 500 ($SPY) in March. If the S&P 500 falls again, I think bitcoin will fall with the S&P 500. Gold will probably also fall somewhat as it did toward the end of the Credit Crisis, but the big pullback seems over. For $BTC-USD, major support is $7,000, which is about 30% below $10,000. finance.yahoo.com/...
Mikhail_Bitcoinovich profile picture
@Michael Bryant, because bitcoin is owned disproportionally by individual investors, and within this group disproportionally by millennials, you have what I refer to as the Robinhood effect: younger investors that use Robinhood and other similar platform that allow investments in stocks and bitcoin side-by-side have had the effect of erasing the boundary between these two assets in the minds of many of these younger investors.

I have noticed that the Robinhood effect can cause short term inverse correlation between stocks and bitcoin when you get a day when the stock market soars and bitcoin corrects, indicating a flow of money from bitcoin to stocks. This short-term inverse correlation then cancels out within a few days.

Conversely, when there is fear and people dump all their stocks, the Robinhood effect can cause a close correlation between the two asset classes as both get dumped indiscriminately.

It’s just has been my observation... so depending on the speed of the upcoming drop in the stock markets that you are predicting, bitcoin may do exactly what you are saying and get dumped with stocks.
jimbo162 profile picture
Exactly Michael, "if" we see another market selloff prices will get hammered same as before. On the other hand we continue with this pumping of the markets with more liquidity (the FED seems to have no limits) all asset prices will rise and we see new highs across the board, gold-stocks-bitcoin will benefit.
This scenario has been my experience since I bought shares of GBTC and gold back in February. I felt that this would be a better place to be than in stocks, but I have been surprised to see that when the stocks crashed so did both of these investments. So much for safe haven assets. I heard the talking heads explaining that this was likely due to folks having to cover margin calls, but the continuing behavior of the pattern suggests otherwise to me. I now have doubts that Bitcoin and gold are my expected fear and safe haven investments so much as speculative ones. If things get really dicey folks are going to cash, not BTC or gold. Maybe it is best to join them initially and then buy in at the lower entry points. But will they ever rise again if fear remains?
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