Charting Bitcoin’s Breakout
Bitcoin and precious metals have surged in the past couple of weeks as the worsening coronavirus pandemic increases demand for safe-haven assets. Back in May, I explained that Bitcoin was likely to experience a powerful move in the near future because of technical price patterns that were developing. One of the technical patterns I showed was the $10,000 to $11,000 resistance zone that had been acting as a price ceiling since the fall of 2019. In the past week, Bitcoin has managed to break above this important psychological zone, which is an encouraging sign (assuming that it stays above this zone).
In May, I also explained that Bitcoin was forming a wedge pattern over the past few years that would likely culminate in a powerful move. Bitcoin’s surge in the past week caused it to break out of this wedge pattern, which increases the probability of further upside (assuming that the breakout holds).
It’s not surprising to see safe-havens like Bitcoin and precious metals soaring so powerfully as the coronavirus pandemic takes an unfortunate turn for the worse. The worsening pandemic means that global central banks and governments will be forced to provide much more monetary and fiscal support to their economies, which implies more currency debasement and government debt – both of which are beneficial for unprintable assets like Bitcoin and precious metals.
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