In late 2022, Bitcoin dropped into the $16,000 range in the wake of the FTX scandal. At the time, the landscape was void of credible institutional buy calls. Instead, most of Wall Street stood on the sidelines or echoed consensus risk-off narratives.
Now, as Bitcoin trades more than 600% above its 2022 bottom, a tidal wave of institutional optimism has arrived with many analysts and money managers calling for a doubling in price before year-end. These predictions, while headline-grabbing, arrived only after Bitcoin had already made the bulk of its move in late 2024.
Sentiment is a powerful force in the markets. Historically, the most optimistic bullish narratives tend to emerge when prices are extended, while more cautious narratives often appear near market lows.
Meanwhile, the I/O Fund has consistently set ourselves apart with early, accurate Bitcoin coverage starting in 2019. While others chased the 2021 hype with $200,000 or $500,000 price targets, we took a disciplined approach—cutting crypto exposure by half to lock in gains. More recently, when Bitcoin dropped to the $16,000 region, we issued a Strong Buy Alert to our free subscribers, which was featured on Tier 1 media.
These calls were rooted in a systematic approach to analyzing and investing in Bitcoin through the lens of technical analysis, on-chain analysis, and monitoring global liquidity trends.
Now, the system that helped us identify the $16,000 bottom in Bitcoin is telling a more complex story. Global liquidity appears to be stalling and setting up for a reversal. This is historically not good for Bitcoin and tends to coincide with major tops. This inflection point lines up with our Technical Analysis that has us in the final leg of the multi-year bull market.
However, the size of this final leg is what is in question. While we believe a modest move higher has the most probable scenario, On-Chain Analysis supports a large push higher that could exceed the $200,000 region before hitting a cyclical top. For this reason, we explain our game plan in this report to protect our well-earned gains while remaining positioned for the bulk of the next move higher, no matter where the final target is.
On-Chain Analysis – The Case for Bitcoin $200,000
We’ve consistently relied on WealthUmbrella’s top-tier On-Chain Analysis throughout this cycle. Their model flashed a buy alert in December 2022, around the same time our own system showed a major opportunity in Bitcoin. Since then, they’ve remained as bullish as we have been. The below section was contributed by WealthUmbrella, and they see higher levels before a cyclical top is likely in for Bitcoin.
Volatility Is Low
One of the most meaningful signals today is realized volatility, which simply measures how much Bitcoin’s price has actually moved (up or down) over a recent period. Right now, that volatility is close to a historic low.
Chart created by WealthUmbrella, shows that the current level of realized volatility resembles major lows, not what we see around major tops.
Historically, major tops in Bitcoin—both short-term and long-term—have happened when volatility was rising or already high. So, this current period of low volatility is not something we usually see at the end of a bull run. In fact, it looks more like what we saw at the bottom in late 2022, just before Bitcoin began its massive recovery.
As Bitcoin becomes more mature—especially now that large institutions are involved—some decline in volatility is to be expected. But a full market top forming while volatility is still at record lows would be something unprecedented.
The Supply Side Remains Strong
There’s also strength under the surface. During the recent rally, long-term Bitcoin holders (those who held through prior cycles) were gradually selling. But that selling pressure has cooled off.
Chart created by WealthUmbrella shows the demand for Bitcoin remains healthy in August of 2025.
Meanwhile, new Bitcoin wallets with a balance of zero – i.e., new investors to Bitcoin —are increasing. This means retail demand is growing steadily. That trend has actually picked up pace in recent weeks, which is a healthy sign.
The Dip Could Be Setting the Stage for the Next Move Up
This doesn’t mean Bitcoin won’t dip a bit lower short term. Its recent price action has been closely tied to movements in the stock market, especially because ETF inflows are driving a lot of the demand. The good news is that this small pullback has already helped cool off some of the overbought conditions that had built up, which should set the stage for another leg higher.
One of our key models, the Metcalfe Law Discount/Premium (MLDP) Z-Score, confirms this. This model is based on the idea that Bitcoin’s value comes from the size and activity of its network (similar to how Metcalfe’s Law values a communications network). The Z-Score shows how “hot” or “cold” the market is relative to its historical patterns.
Chart created by WealthUmbrella shows the Metcalfe Law Discount/Premium (MLDP) Z-Score has ample room to run before hitting a level associated with a meaningful top.
Right now, the Z-Score is down to 0.91. For context, that’s one standard deviation lower than where it was when Bitcoin first crossed $112.9K on July 10. That kind of cooling historically creates room for further upside.
However, our indicators suggest that the next push higher will not be the last or will be a rather large push higher. Our confidence is grounded in a group of in-house models we call Market Top indicators. These models are designed to signal when the market is getting truly euphoric—and they’ve done a good job across different Bitcoin cycles.
Chart created by WealthUmbrella shows that their 3 primary top indicators, which track different elements of Bitcoin’s ecosystem, are in alignment that Bitcoin is not in threat of topping out, yet.
What’s imperative to understand is that these models each look at different parts of the ecosystem—network activity, profit-taking behavior, capital flows. So the chance that all of them would miss the mark at the same time is very low. And if that ever did happen, it would likely mean Bitcoin’s fundamentals have changed in a way that’s never happened before.
To further back this claim, we have run intensive simulations to estimate where Bitcoin’s cyclical top could land. That means: what price would Bitcoin need to reach for all our major models to flash “this is the top”? Using various models, tell us what price would trigger them to signal a top.
The result of this simulation including price targets for a Bitcoin cycle top are discussed in the last section of this report….
How Global Liquidity May Derail the Move to $200,000
Liquidity is one of the most overused—and least understood—terms in financial markets. It refers to the availability of capital in the system—specifically, how easily businesses, consumers, and financial institutions can access cash or credit.
In today's global economy, liquidity is inseparable from debt dynamics. It is not the creation of new debt that dominates capital flows, but the ability to roll over existing obligations. In fact, three out of every four global financial transactions are related to debt refinancing, not expansion. Moreover, nearly 80% of global lending now requires collateral, typically in the form of high-quality, low-volatility assets like U.S. Treasuries.
This creates a framework where liquidity—and by extension, risk appetite—is dictated by how cheaply and easily borrowers can refinance without overcollateralizing. The more capital that’s freed up through this process, the more capital can rotate into risk-on assets such as Bitcoin.
A number of variables influence liquidity conditions:
- Central bank policy
- Fiscal spending
- The Treasury General Account (TGA)
- Federal Reserve repo operations
- Broad equity market performance
- Bond market volatility
Collectively, these forces determine whether capital and confidence flow into the system or are pulled out. However, among all these variables, the most powerful and persistent driver of global liquidity is the U.S. Dollar.
Roughly 64% of global debt is denominated in USD—which means foreign borrowers who accessed cheap U.S. capital must continue sourcing dollars to service that debt. When the dollar weakens relative to their local currencies, less local currency is needed to meet dollar obligations. This frees up capital that can chase higher-yielding risk assets, including Bitcoin.
This inverse relationship between the U.S. Dollar Index (DXY) and Bitcoin has been both consistent and predictive across cycles:
Bitcoin tops have an inverse relationship to the strength of the U.S. Dollar.
In the above chart, three dynamics are evident:
- Every major Bitcoin bull market occurred during a declining dollar.
- Every significant Bitcoin bear market coincided with a rising dollar.
- The steepness of the dollar’s trend often defines the magnitude of Bitcoin’s move in the opposite direction.
We are now approaching a critical inflection point. The Dollar Index has been in a clear downtrend since peaking in late September 2022—just weeks before Bitcoin bottomed. The most recent leg of this decline in the dollar shows a completed five-wave structure, typically the final phase of a correction before a reversal. Momentum is starting to shift upward, and a sustained move above 101 on the DXY would confirm a major low and the onset of a new dollar uptrend.
As of August 2025, the U.S. Dollar Index (DXY) appears to be forming a significant bottom and initiating a new uptrend. A strengthening dollar typically signals a contraction in global liquidity, which could pose headwinds for the ongoing Bitcoin bull market and other risk assets.
The implications are profound. A rising dollar increases the cost of servicing USD-denominated debt for foreign borrowers, draining liquidity from the system and reducing available capital for speculative assets like Bitcoin. In other words, a stronger dollar means tighter global liquidity, and risk assets must adjust accordingly.
However, until DXY can break above $101, it can still make another low, which will further support higher prices in Bitcoin. The takeaway here is to note that the U.S. dollar is closer to a major low than most think. While it can extend further, once we get evidence of a trend reversal, this should line up with a topping process in Bitcoin. Until then, we can and should see Bitcoin continue on an upward trajectory
Using Technical Analysis to Organize the Current Risk in Bitcoin
On-Chain Analysis supports an eventual move to ~$200,000 in Bitcoin before seeing a cyclical top. However, we are seeing the U.S. Dollar close to putting in a major low and threatening to drain global liquidity in the coming uptrend.
When we see potentially conflicting data points between liquidity dynamics and On-Chain Analysis, we tend to lean into Technical Analysis to define the risk parameters in our portfolio. The below section outlines the two most likely paths Bitcoin will take, including the game plan we intend to follow to protect our gains and not miss any of the remaining uptrend….
Is Bitcoin a Buy Right Now? Join Us for a Free 1-Hour Webinar on Bitcoin from a leading team in crypto
Risk managing Bitcoin and other cryptocurrencies has helped the I/O Fund to become a high performing tech portfolio. If we were a hedge fund, we’d rank #2. If we were an ETF, we’d rank #5.tech portfolio. If we were a hedge fund, we’d rank #2. If we were an ETF, we’d rank #5.
Sign up below to receive the following information
- Our outline for the critical levels that must hold including at what price levels Bitcoin will top in the near-term and what levels Bitcoin will ultimately top in this cycle
- Upside price targets for Bitcoin and our playbook to lock-in gains while managing risk
- Zoom instructions to a free 1-hour webinar on Bitcoin and crypto held by the team that nailed Bitcoin’s bottom: Knox Ridley, Portfolio Manager of I/O Fund, and Vincent Duchaine of Wealth Umbrella
- The webinar will be recorded and sent to all participants
Bitcoin is tracing a textbook five-wave advance from its 2022 lows, and by our count, we are now in—or very near—the completion of the final 5th wave.
In Elliott Wave Theory:
- Markets move in 5 waves, where waves 1,3,5 are in the predominant direction of the trend, while waves 2 and 4 are corrections within that trend.
- Wave 3 is the most explosive segment—driven by panic short-covering, breakout buying, and peak momentum/volume.
- Wave 5 is often deceptive. It represents late-cycle optimism, where retail investors and lagging institutions enter, believing the trend is just beginning. It tends to produce a higher high on lower momentum and lower volume.
This current pattern is unfolding exactly as expected. The vertical move in late 2024 was the Wave 3 breakout, marked by peak RSI, momentum, and volume. Every move higher since has shown diminishing participation, with weekly RSI repeatedly stalling around the key 72 level—a threshold that historically coincides with local tops.
A 3-day chart shows Bitcoin is in the final 5th wave of its bull cycle. Either we have one more minor swing, or one more larger swing before starting a new bear cycle.
Based on momentum and volume dynamics, and in alignment with our structural wave count since early 2023, we are closely tracking two primary outcomes:
- Red – Bitcoin makes one final push toward ~$128,000 – $149,000. Price remains capped below the key $149,000 level. This triggers a breakdown through successive support zones: $109,000 – $104,500, $92,900 – $86,750. This confirms the end of the larger 5th wave, initiating a multi-month corrective phase with downside targets ranging between $70,000 and $40,000.
- Green – Bitcoin finds support between, preferably, $109,000 – $104,500. However, it can still test the $92,900 – $86,750 region and still be valid. A renewed leg higher breaks the $149,000 region with accelerating volume and momentum. This opens the door to extended Wave 5 targets between $200,000 and $225,000, and best line up with the Wealth Umbrella scenario.
A daily chart showing the potential final swings in Bitcoin’s bull cycle. The $133,000 region will be a strong barrier to overcome.
Interestingly, when we circle back to WealthUmbrella’s simulation, the results of their price projections for this cycle best lines up with the scenarios presented above.
According to WealthUmbrella, their conclusion is that the average cycle top is now clustering around $214,000, the average cycle top is now clustering around $214,000, with tight variation across all three models. Furthermore, The MLDP Z-Score model would hit next time its typical “euphoria” zone (3 standard deviations) around $144,000–$165,000, which is significantly below our estimated cycle top. This reinforces our view that the MLDP remains the best short-term reference model for now.
In conclusion, while global liquidity appears to be approaching an inflection point, both Technical Analysis and On-Chain Analysis support another push higher, which would target ~$140,000. This is where Technical Analysis departs slightly from On-Chain Analysis. While we see a path to $200,000, as outlined in our green count, we will take some gains on the next push, then wait to see how price reacts in this region to determine if we cut more, or add it back for the push to $200,000.
Without a systematic game plan based in correlated analysis, sentiment coupled with convincing narratives are designed to force investors to do the wrong thing at the wrong time. We’ve seen this time and time again when classic financial analysts attempt to justify higher targets around major tops.
Historically, narratives-based investing in Bitcoin has been a problem.
Using the system outlined in this report, the I/O Fund has been able to navigate the extreme swings in Bitcoin with uncanny accuracy. While liquidity is flashing yellow, on-chain analysis is flashing green, providing a complex picture. Regardless, both inputs line up with us being in the final 5th wave of a multi-year bull cycle, which are accounted for in our Elliott Wave counts.
Considering the risk, we plan to trade the remainder of this 5th wave – take gains in the next run higher, wait for confirmation on the following drop or bigger breakout to get back in, or the break-down of critical support to sell the other half.
Free 1-Hour Webinar on Bitcoin!
If you are sitting on outsized crypto gains and have no exit plan or wanting to participate in the next run higher in crypto, we encourage you to join a special webinar next Thursday, 8/21 at 4:30 EST, with the I/O Fund’s lead technical analyst, Knox Ridley, and WealthUmbrella founder, Vincent Duchaine. Together, they’ll dive deep into the internal health of both crypto and equity markets, reveal what smart money is doing, and lay out a tactical roadmap for what comes next. Whether you're trying to lock in gains or position for the next breakout, this session will give you a major edge.
Hi there,
You are invited to a Zoom webinar.
When: Aug 21, 2025 01:30 PM Pacific Time (US and Canada)
Topic: Bitcoin and Stocks: How Much Fuel Is Left in the Rally?
Please click the link below to join the webinar:
https://us02web.zoom.us/j/89387087895
Passcode: 144
Or One tap mobile :
US: +17193594580,,89387087895# or +12532050468,,89387087895#
Or Telephone:
Dial(for higher quality, dial a number based on your current location):
US: +1 719 359 4580 or +1 253 205 0468 or +1 253 215 8782 or +1 346 248 7799 or +1 669 444 9171 or +1 669 900 6833 or +1 386 347 5053 or +1 507 473 4847 or +1 564 217 2000 or +1 646 931 3860 or +1 689 278 1000 or +1 929 205 6099 or +1 301 715 8592 or +1 305 224 1968 or +1 309 205 3325 or +1 312 626 6799 or +1 360 209 5623
Webinar ID: 893 8708 7895
International numbers available: https://us02web.zoom.us/u/kbxFmLQQGW
Please note: The I/O Fund conducts research and draws conclusions for the company’s portfolio. We then share that information with our readers and offer real-time trade notifications. This is not a guarantee of a stock’s performance and it is not financial advice. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis. Beth Kindig and the I/O Fund own BTC at the time of writing and may own stocks pictured in the charts.
Recommended Reading: