Coinbase crashes again just before bitcoin tumbles below $10,000

7 min readJun 3, 2020

Hi everyone,

It’s clear that stocks have completely divorced themselves from economic reality as the Nasdaq trades at all time highs despite everything to the contrary. Even the most skilled mental gymnast wouldn’t be able to convince me otherwise. Meanwhile, bitcoin’s attempted breakout just under $10,500 ended up turning into a bull trap (outlined in Monday’s newsletter) as it retraced to the lower $9,000 region in mere minutes. As it happened, one of the largest exchanges in the industry — Coinbase — experienced another outage which barred users from managing their investments and trades.

While good things are going on in the world, you should know that this newsletter will be characterized by indignation more than anything else.

Behold the biggest economic crisis of our lifetime

SPX futures trading just 8% under all time highs.

NDX futures trading at the same levels of February 19/20 all time highs.

Unfortunately, to say that this is a catastrophe isn’t hyperbole, nor is it something that came about organically by any stretch of the imagination. This catastrophe is the result of unlimited free capital which for the most part had gone unnoticed by the masses ever since the inception of the US Dollar standard. As I write this, amidst a concoction of fear, greed, and an eerie feeling that “this is it” are people in dire straits figuring out how to get out of their situation. Rest assured, this chaos will not only provide a mass education in finance, but will also be the bedrock that will launch us into a new era with different rules and an entirely new game. As it happens, it’s safe to assume that the stock market — as it currently stands — is an exit scam no different than China’s OANDA. The M2 money supply is effectively a government bailout that is nationalizing zombie companies and sending executives and c-levels on their merry way to the Cayman islands, simply for having existed.

Coinbase crashes at a crucial moment again

As has come to be expected, Coinbase — which is one of the biggest exchanges in the industry with an $8 billion valuation — crashed just as bitcoin soared to $10,400. Once bitcoin broke the psychological level of $10,000, bitcoiners alike were elated at the prospect of a major breakthrough in bitcoin’s price history, but the top US exchange crashed right at the moment of truth, as it has done many times before.

“ We are currently experiencing intermittent downtime,” Coinbase told users just as the bitcoin price leaped over $10,000 — reporting it was “ back up and running” just over an hour later.

Having witnessed this outage more than once, influencers on crypto Twitter voiced their concerns with the platform’s consistent failures.

“ How does an exchange with an $8 billion valuation crash every time bitcoin pumps 5%,” Chief executive of recruiting firm Crypto Capital Venture, Dan Gambardello, asked on Twitter.

Just last month, another Coinbase outage locked users from their accounts just as bitcoin was attempting another $10,000 run. Before that, Coinbase went down again in March with catastrophic results that resulted in 20% depreciation in portfolio values in minutes. If these instances do not warrant an investigation for securities fraud — similar to Arthur Hayes’ Bitmex lawsuits — then it’s high time users took things into their own hands and moved to more reputable exchanges and if need be, to decentralized exchanges.

Some Twitter users have also posited that Coinbase have a so-called “panic switch”, or an algorithm which triggers any time there’s a $500 dollar move.

Needless to say, platforms such as Coinbase and Bitmex have demonstrated time and again that they are not fit for purpose, in what appears to be a growing list of exchanges that cannot adequately support their users, and in some cases even trade against them. This is unacceptable.

Technically speaking

4-hour prospects

Bitcoin got rejected just as it hit $10,430 in a major bull trap that sent the price down 10% to $9148 ( Bitfinex) in mere minutes. The move ended up forcing bitcoin back into its consolidation pennant just above the 4-hour 50-EMA as if the breakout never happened. From a technical perspective, bitcoin is currently trading in bearish territory on both the RSI and the MFI, which are both below the 50-point mid line on the 4-hour time frame. The upside target hasn’t changed and as long as bitcoin remains below $10,500, then lower prices mentioned in prior newsletters remain plausible — namely a retest of the $9,000 area, which if broken, might lead further downside. In fact, should bitcoin slide below $8,800, then this opens the door to another retest of the $7,500 breakout area and possibly even the high $6,000’s as an ultimate bottom.

From a bullish and speculative point of view, should bitcoin trade sideways and witness a second dump to $9,000 or the high $8,000 level and hold, then there would be a good chance that this shakedown doesn’t have much juice in it. A bearish follow-through to these levels would be the third and final test of this bullish pennant, which if held, would provide a base-line for bullish continuation. Among the cluster of indicators suggesting the significance of these levels is the VPVR (volume profile), which shows a volume spike at $8,800 ( Bitfinex). If the uptrend is to continue, then bulls would do well to hold this level.

Daily picture

A similar picture is painted on the daily chart for the bulls, with the 50-daily EMA resting at the $8,800, which also coincides with a cluster of supporting indicators and trend lines. The RSI is meandering in marginally bullish territory while the MFI is in marginally bearish territory, which could be considered neutral or invalid given the conflicting signals. Having said that, a series of higher highs in bitcoins price has been accompanied by a series of lower highs on the RSI (and MFI), indicating significant bearish divergence that cannot be ignored.

Weekly outlook

Bitcoin’s weekly outlook is bullish, but TD-sequential is suggesting a possible consolidation period before resuming the uptrend to new all time highs. While both the RSI and MFI are in bullish territory and have considerable room to the upside, a TD-sequential 9, which often signals a reversal, has flashed red this week. Since bitcoin is transitioning into a multi-year bull-market, it’s entirely conceivable that a period of consolidation similar to the 2017 run could ensue before the next run up to $10,500 and beyond. At the time of writing, bitcoin seems to have come to a key decision point on multiple time-frames, which will potentially dictate the timeline for this next cycle.

In any case, now is the time to observe and wait for direction confirmation given the notable bull-trap that just ensued. The ball is in the bear’s court for follow-through — and perhaps those exchanges which are determined to defraud their users.