With Bitcoin at All-Time Highs, Here’s What’s Next for COIN, HOOD

Posted on June 13, 2024June 30, 2026 by io-fund

We said to our free readers in late January following the SEC’s approval of nearly one dozen spot Bitcoin ETFs that it was “widely expected that this approval and subsequent widespread access for institutions and retail investors will shape up to be one of the most bullish fundamental moments in Bitcoin’s history.” At the time, Bitcoin was trading for less than $40,000. Now, Bitcoin has repeatedly pushed above the $70,000 mark, and we updated our Bitcoin game plan and price targets to $106K to $190K in late April as Bitcoin pulled back below $60,000.

While Bitcoin and the spot BTC ETFs have clearly seen strong investor appetite since the approval in the beginning of the year – for example, BlackRock’s iShares Bitcoin Trust (IBIT) reached $10 billion in AUM in less than seven weeks as it went on to notch 71 consecutive days of net inflows. IBIT now has more than $23 billion in AUM, or 305,067 BTC, more than doubling in three months. Alongside strong initial adoption of the new ETF class, we’re also seeing major crypto exchanges and platforms benefit, with Coinbase and Robinhood both seeing crypto trading volumes and transaction revenues surge.

This may cause investors to believe that Coinbase and Robinhood are clear beneficiaries, yet we foresee trouble for HOOD specifically. Our firm excels at using technical analysis to manage high beta positions, which is why our Bitcoin entries and exits have greatly outperformed a buy-and-hold strategy, as we previously detailed here. Not only are the technicals flashing on Robinhood but the fundamentals show concentration risk in Dogecoin, one of the riskiest coins on the market. We spell out what it could mean for our readers, and why Robinhood is (yet again) a risk to both investors and crypto holders.

Coinbase Says Crypto Volatility Ticked Up in Q1

After reaching the lowest levels since 2016 in Q3 last year, crypto volatility has begun to increase, with Coinbase noting that an internal measurement of crypto asset volatility rose “sharply, but remained well below all-time high levels.”

Coinbase measures volatility “based on intraday returns of a volume-weighted basket of all assets listed on our trading platform [which] are used to compute the basket’s intraday volatility which is then scaled to a daily window. These daily volatility values are then averaged over the applicable time period as needed.”

Source: CoinbaseCoinbase

Alongside this rise in crypto volatility towards the 5% range, Coinbase noted a surge in the crypto market cap, which “reached a 52-week high of approximately $2.8 trillion in Q1.” This also returned to the peak levels seen in Q3 and Q4 2021, which coincided with both Coinbase’s and Robinhood’s record high transaction revenues and trading volumes. Coinbase said that while it cannot identify a specific singular driver of this increase in crypto market cap through Q1, it pointed to “a variety of factors, such as the launch of the Bitcoin ETFs which experienced over $11 billion in net inflows so far in 2024.”

While we saw the pace of inflows slow to a crawl through April and May, June so far has seen inflows top the $500 million mark once again, recording the second highest daily net inflow since the start of the year at more than $886 million.

Source: The BlockThe Block

Crypto market cap has stayed relatively flat this quarter so far compared to Q1, last reaching $2.68 trillion on June 11, just 7% below its peak of $2.89 trillion in early March. This was aided by the SEC’s initial approval of 8 Ethereum ETFs in late May and a 20% rise in ETH – another possible volatility-spurring event. Overall, Q1 saw very favorable conditions for Coinbase and Robinhood to accelerate trading volume growth and transaction revenue generation with an increase in volatility along with rising crypto prices, and these conditions look to have persisted through much of Q2 so far, albeit with a slowdown in net inflows to BTC ETFs early in the quarter.

Coinbase, Robinhood Trading Volumes Accelerating Significantly

Both Coinbase and Robinhood reported significant accelerations in trading volumes in Q1, with participation from both retail and institutional investors increasing.

Coinbase reported total trading volume of $312 billion, a 103% QoQ increase from $154 billion in Q4, and a 312% increase from Q3’s low of $76 billion. Growth was driven by both retail and institutional customers, though as Coinbase’s largest and primary customer group, institutions drove a lion’s share (83%) of the dollar increase in trading volume.

Source: I/O Fund

Institutional trading volume of $256 billion represented a 105% QoQ increase, or $131 billion, reaching the highest level since Q1 2022. Retail trading volume rose 93% QoQ to $56 billion in Q1, more than 5x higher than Q3’s $11 billion. Bitcoin was the primary driver of the QoQ increase in trading volume, with Bitcoin’s volume rising from below $48 billion in Q4 to $103 billion in Q1.

Robinhood’s crypto trading volume growth outpaced Coinbase’s in Q1, though at a much smaller base due to the lack of institutional investors on the platform. Robinhood reported 224% YoY and 181% QoQ growth in crypto trading volume to $36 billion, or 429% higher than Q3’s $6.8 billion. This growth was driven primarily by a surge in volume in March, where Robinhood reported $23.6 billion in volume, a 263% MoM increase.

Source: I/O Fund

Robinhood also has shared April and May’s crypto trading volume metrics, reporting trading volume of $10.1 billion in April, a (57%) MoM decline but a 173% YoY increase. May’s crypto trading volume slipped (30%) MoM to $7.1 billion; this still represented a strong 238% YoY increase. We’re seeing one primary asset driving this growth in Q1 and this sequential MoM weakness through Q2, which raises one red flag for the durability of transaction revenue growth moving forward.

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Coinbase, Robinhood’s Transaction Revenues Surging

As a result of the rapid acceleration in crypto trading volumes across Coinbase and Robinhood, the two are seeing transaction revenues surge. In Robinhood’s case, crypto is now becoming a much larger part of transaction revenues and thus overall revenues.

Coinbase reported transaction revenue of $1.08 billion in Q1, including $56 million of Base and payment related revenue. This represented YoY growth of 187% and QoQ growth of 103%, an acceleration from Q4’s 64% YoY and 83% QoQ growth. In just two quarters, Coinbase’s transaction revenue has risen nearly 275% due to accelerating growth in retail trading volume.

Source: I/O Fund

Retail (consumer) transaction revenue increased 184% YoY and 99% QoQ; in dollar terms, revenue increased nearly $470 million from last quarter on a $27 billion increase in volume. Institutional transaction revenue approached levels last seen in Q4 2021, reaching $85.4 million in Q1. Revenue from this cohort has increased $71 million over the last two quarters, as trading volume surged nearly $200 billion.

Coinbase shared some light on Q2’s outlook, saying that “in April, we generated over $300 million of total transaction revenue and expect Q2 subscription and services revenue to be within a range of $525-$600 million, assuming crypto asset prices stay in the range we have seen year to date.” Extrapolating this across May and June suggests Q2’s total transaction revenues are set to decline sequentially, by approximately (10%) to (15%).

This highlights two major facets of Coinbase’s model – while institutions drive a majority of volume on the platform, the transaction fees are a tiny fraction of what retail pays, meaning that strong growth in institutional volume will barely be felt on the top line. It also highlights that despite increasing fee-based competition from both Robinhood and ETFs, Coinbase is driving revenues higher on smaller volumes than it had seen in 2021. This means that if crypto adoption and volatility brings trading volumes near peak 2021’s levels, revenue is likely to easily exceed those historical peaks. However, transaction revenue growth may have peaked for the short term, given April’s results and trends seen in Robinhood.

For Robinhood, crypto is but one of the many investing products offered on the platform alongside equities and options, with options historically serving as the largest driver of transaction revenue. Crypto transaction revenue was $126 million in Q1, an increase of 232% YoY and 193% QoQ. Compared to Q3 2023, it’s an increase of nearly 448%.

Source: I/O Fund

Robinhood Has Nearly as Much Doge as Bitcoin = High Risk

Crypto transaction revenue now accounts for 38% of Robinhood’s total transaction revenue, up from 22% last quarter and 12% in Q3. This was crypto’s highest share of transaction revenue since Q2 2021, where it drove 52% on elevated interest and extreme trading volume in Dogecoin, which accounted for 62% of crypto trading volume in the quarter.

Dogecoin remains a critical piece of Robinhood’s crypto business and a likely driver of recent growth alongside Bitcoin – safeguarded customer assets of Dogecoin increased 122% QoQ to $7.37 billion, or 28% of total safeguarded crypto assets. For comparison, safeguarded Bitcoin assets rose just 68% QoQ to $10.31 billion.

It's likely that a majority of March’s $23.6 billion in crypto trading volume can be traced back to Dogecoin, with the same going for April and May. March saw extreme volatility in Dogecoin’s price as it topped $0.20, with daily volumes regularly topping 3 billion, and reaching as high as over 12 billion, whereas in January and February daily volume rarely surpassed 2 billion. Daily volume remained elevated in April as Robinhood reported more than $10 billion in crypto trading volume, while Doge’s volume has dipped in May where Robinhood’s crypto volume declined (30%) MoM.

Source: CoinMarketCapCoinMarketCap

This raises a question of how durable transaction revenue growth is, assuming crypto trading volumes decline (30%) QoQ in Q2 on fading volume in Dogecoin, and plateau in Q3. Trading volumes are continuing to slip MoM, as seen in April and May’s results, providing a headwind to transaction revenue growth as this elevated volatility in Dogecoin dissipates.

Robinhood received a Wells Notice in early May regarding crypto tokens listed on the platform, though it is not clear exactly which tokens the SEC is targeting in the notice. Robinhood CFO Jason Warnick explained in Q1’s earnings call that it is “business as usual for Robinhood Crypto. We're, of course, disappointed to have received the notice. As you know, we've operated our crypto business in good faith. We've been very conservative in our approach in terms of coins listed and services offered. And we're a highly regulated company and have applied the same legal and compliance standards we use for our brokerage to the way we run our crypto business. So, it's disappointing to see more regulation by enforcement here.” At the same time, Robinhood is working on expanding its crypto presence globally, buying BitStamp for $200 million.

Robinhood’s High Concentration Risk in Dogecoin

As a reminder, Dogecoin contributed 62% of Robinhood's revenue in the previous crypto run-up, which did not end well for investors as the high concentration contributed to the stock losing 90% of its value as Dogecoin’s hype and price faded shortly after Robinhood’s IPO.

We can clearly see how Doge’s price and volatility are correlated to Robinhood’s trading volume and transaction revenue growth.

Doge’s price surged to the pennies in Q1 2021 on more than 850 billion in volume, with Robinhood reporting nearly $88 billion in trading volume. Q2 2021 saw Doge’s price surge above $0.70 on extreme volatility with volume of 680 billion, driving Robinhood’s Q2 2021 trading volume up to $233 billion, a 3x QoQ increase. Transaction revenues soared from $12 million in Q4 2020 to $233 million in Q2 2021, a remarkable growth rate in just two quarters. However, this quickly faded to $51 million in Q3 2021 as Dogecoin’s volatility and volume faded quickly.

Trading volume declined steadily hand-in-hand with Doge through 2023 – October 2022’s pop in Doge drove a 16% MoM increase in Robinhood’s trading volume from $15.5 billion to $18 billion, which quickly dropped to below $15 billion in November and continued its trend of declining consistently. Doge’s recent increase again has correlated with increased volumes and transaction revenues for Robinhood in the first quarter, but has led to declining trading volumes and likely transaction revenue for Q2.

Source: CoinMarketCapCoinMarketCap

Source: I/O Fund

Analysts seemed to poke about Robinhood’s heavy concentration and reliance on Doge in Q1’s call, though management’s response was very vague.

Q, Brian Bertram Bedell (Deutsche Bank): “Maybe just staying on the crypto theme, maybe for Jason, if you can talk about just the nature of the surge in crypto volumes in March. And I think you said April was at $10 billion. I appreciate, of course, this is very volatile class, but maybe if you can just talk about what you're seeing that drove that heavy activity in March and whether you think we could see spikes like that again?”

A, Vladimir Tenev (CEO): “…Our crypto activity does track the broader market. And I don't really want to get into prognosticating what the crypto market is going to do. That's obviously a difficult thing for anyone to do. It's a global market. … But the goal is also to diversify the business so that we're less reliant on volumes anywhere in any one category to drive business results.”

While management vaguely pointed to the broader market as a driver of growth, the comments about diversifying away from one asset again hints at Dogecoin being a primary driver of trading volume and transaction revenue growth, further supported by safeguarded assets more than doubling QoQ.

This heavy reliance on a memecoin raises risks for durable crypto revenue growth outside of Dogecoin, and we have seen cases where companies with heavy customer concentration have failed to deliver for investors. For example, AI lending platform Upstart, which has faced significant macro headwinds recently, had significant customer concentration, with two customers combining for more than 80% of revenue in both 2020 and 2021. Prior to the first rate hike in March 2022 and before feeling the effects of the challenging macro in Q2 2022, Upstart had lost more than two-thirds of its value.

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Forward Growth Rates Are Low

Despite strong growth in Q1, both Coinbase and Robinhood’s forward revenue growth rates are forecast to slow to a crawl, with sequential growth barely visible, if at all, with minimal single digit growth forecast for 2025 and 2026.

Source: I/O Fund

For Q2, Coinbase is estimated to see revenue decline almost (15%) QoQ, likely driven by softer transaction revenues. Sequential growth is limited through Q1 2025, with revenues estimated to hover around $1.4 billion. Robinhood is in a similar camp, with it estimated to see just $1 million in sequential growth in Q2 before a (6%) sequential decline in Q3.

On an annual view, revenue growth for the two is expected to slow dramatically in FY25 and FY26. Robinhood is estimated to report more than 28% revenue growth this year, but in 2025, growth is expected to decelerate 23 percentage points to just 5.3%. Coinbase’s revenue deceleration is much more severe, with estimated revenue growth of 81.1% in 2024 projected to decelerate to below 1% growth in 2025.

Source: I/O Fund

This rapid revenue deceleration to the single-digits is expected to persist, with Robinhood forecast to see just 3% revenue growth in 2026, while Coinbase’s revenue is expected to decline more than (2%) YoY, pointing to a revenue plateau in the $5.5 to $5.6 billion range.

Technical Analysis:

Coinbase (COIN)

COIN is in an uptrend that appears to be incomplete. It has been tied to Bitcoin’s uptrend, which is even more clearly incomplete. This means that COIN could be setting up for a buying opportunity on the next drop.

The larger pattern in play is a diagonal. This is a 5 wave pattern that is characterized by lots of overlap, big swings in both directions, and tends to obey a trend channel. If this is playing out, then Coin base is setting up for a sharp drop into the $185 – $140 region. This drop will be the final swing lower, which will complete wave 4 of 5. We can see a drop as low as $113 and still maintain the diagonal pattern; however, below this level and the odds start favoring that a major top was already struck in March of this year.

If we are accurate, like Bitcoin, this dip would be another buying opportunity in an on-going uptrend. The final 5th wave would be generally targeting the $300 – $400 region, if confirmed. This is assuming we hold $113.

Source: I/O Fund

Robinhood (HOOD)

HOOD’s chart is not in a healthy position. Note the drop from all-time-highs. This is a direct drop that best resembles a 5 wave pattern. What has followed is an overlapping and messy bounce, which resembles a correction within a larger trend. If this is a developing downtrend, then the initial 5 wave drop is the A wave, the messy bounce is the B wave, which is setting up for a C wave drop, which I would expect to be about the same length as the A wave drop.

The final move higher is also quite telling. The last leg of a corrective bounce is always a 5 wave push against the larger trend. You can clearly see 5 waves in place, which takes us into the ideal topping zone for this move. In order for HOOD to start invalidating this setup, we really need to see a strong move above $48.10.

On the other hand, if HOOD is in the larger downtrend pattern, then the final leg lower will be a C wave. These are always 5 wave patterns, which appears to be vertical moves. If we see a vertical, 5 wave drop from any high, followed by a messy bounce in the opposite direction, we will have strong confirmation that HOOD is setting up for a larger drop.

This is not one we would play from the long side based on what the technical are telling us.

Source: I/O Fund

Conclusion:

Coinbase and Robinhood capitalized on increased crypto volatility in Q1 as crypto prices rose following the approval of spot BTC ETFs in January. Trading volume and transaction revenue growth was stellar for both in the first quarter, but Robinhood’s monthly metrics reflect weak MoM growth through Q2 so far, as Dogecoin volume and volatility subsides.

Robinhood is overdependent on Dogecoin as a primary driver of crypto trading volume and thus crypto transaction revenue, and with crypto accounting for 20% of overall revenue, it’s not something to ignore. Robinhood’s exposure to Dogecoin is unusual, and also a risk most investors probably aren’t aware of. When you couple these fundamental headwinds with the troubling chart, it seems there could be more trouble for HOOD on the horizon. This is not a stock we would play on the long side.

As Bitcoin continues to play out the ongoing bull cycle, we expect COIN to follow. The next high discussed in this writeup is where we will start getting cautious with both Bitcoin and COIN, as both charts suggest an incomplete uptrend. That being said, this drop in COIN appears to be a buying opportunity, as long as the critical support holds that we discussed.

I/O Fund Portfolio Manager Knox Ridley and I/O Fund Equity Analyst Damien Robbins contributed to this analysis.

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:

We Are Raising Our Bitcoin Targets To $106K – $190K

Posted on April 26, 2024June 30, 2026 by io-fund

Bitcoin is an asset where the bulls pound the table to “buy, buy, buy,” and the bears relentlessly and stubbornly call it a scam. In reality, both are the wrong approach. This is because although Bitcoin is the highest performing asset in the past ten years, it’s also the one of the most volatile. Consider that it was trading at $58,000 in March of 2022, and by December of 2022 had lost 72% of its value. That year, the loud and proud Bitcoin bulls were not your friends.

Timing is everything. When it comes to timing, our firm has a proven track record of navigating the life-changing bull case that crypto offers while minimizing the volatility associated with different coins – we achieve this via a unique approach combining technical and on-chain analysis to identify major lows and major tops in each cycle. For example, we diligently detailed to our readers in December of 2022, when Bitcoin was trading in the $16,000 region, that we are “Bullish on Bitcoin”:

“Though we are in the 4th bear cycle in Bitcoin's history, the prior 3 cycles suggest where we are is a rare buying opportunity. There is ample evidence to support the $15,500 level is either a major low or very close to a major low. Both the technical and on-chain analysis support this. As Bitcoin continues to integrate into the global economy, we expect both the volatility and epic returns to calm down. For now, we are content buying Bitcoin at these lows with a long-term mindset.”

One year later, our most recent Bitcoin article stated that the coming pullback into the $39,000 – $35,000 region would likely be “the last great buying opportunity” in this bull cycle. At the time our upper targets were between $75,000 – $132,000. That correction bottomed around $38,500 then led to 90% rally, which topped less than 2% from our $75,000 target.

If Bitcoin were in the Mag 7, it would be the second strongest performer both YTD and on a 1-year basis, edging out Meta at returns of 133% in 1-year and 52% YTD. Had you bought in the $16,000 region, the returns would be 300% in about 17 months’ time.

Source: YChartsYCharts

Looking forward, an important question to ask is, are we at the end of a bull cycle or do we have more room to run? We believe that there is more room within this uptrend. As a result, we are raising our upper Bitcoin targets, as the current volatility appears to be another correction within a much larger uptrend.

In this article, we will support this thesis through on-chain analysis as well as technical analysis. We will also address how Bitcoin appears to be setting up for higher levels while equities look like they’re topping. The popular narrative is that crypto and stocks – especially tech stocks — are correlated. It’s our stance that these two investments are not as correlated as many believe, which lends credence to this potential divergence.

Updated Bitcoin Game Plan

We have remained steadfast on the long-term pattern for Bitcoin, which you can see was intact as far back as July of 2022. While the 2022 drawdown went lower than we anticipated, once we got signs of a bottom, we maintained this pattern around the $15,000 lows. The implication was that 2022 was a correction within a much larger uptrend, and that we were going to see a new bull cycle into 2023 – 2024.

As of today, we are more than halfway into the current bull cycle, which is the final 5th wave in a very large 5 wave uptrend that started in late 2018. What this means is that as we approach our upper targets, our game plan will shift from accumulation to distribution.

Source: I/O Fund

The current drawdown appears to be tracing a bull flag, which is a correction within an uptrend. The $57,000 region is very strong support, which is the upper range of our support zones that need to hold in order for us to push higher. This is over 25% lower than price currently is, which shows the level of strength still in Bitcoin. If we do see another drop, we can go as low as $42,750 without invalidating the larger uptrend in play. So, this ongoing pattern is comfortably intact and has ample room to drop, if we see more volatility.

While the pattern appears to be corrective, and tracing a standard pattern we see within larger uptrends, the momentum oscillator below price is at a major support zone. Note how this support region acted as key lows, especially in the current uptrend that started in late 2022. Also, note how much higher price is compared to other instances where this support was tested. This suggests a low being put in, while also suggesting that we have ample room to push higher in the coming weeks to months.

Because of this development, we are increasing our upper target zone from $75,000 – $130,000 to $106,000 on the low end, and $190,000 on the high end. As long as the $42,750 support region holds on any on-going volatility, then we have no reason to doubt the uptrend in place. That being said, we do not see the same upside within the equity markets, which begs the question – is Bitcoin highly correlated to tech stocks?

Bitcoin vs. Tech

On April 18th, we saw an escalation of the concerning geopolitical conflict between Iran and Israel. As a result, the NASDAQ-100 closed down over 2% the following day, with AI leaders like NVDA giving back 10% in a single day.

There were not many areas of tech that were spared on that day of selling, as investors sought to de-risk at any price. One would think Bitcoin would follow tech on this day, but it was instead up nearly 1%. In fact, many alt-coins shrugged off this news and pushed higher. Granted this is only one day, but it is an intriguing development. This was the first instance of panic selling in over 6 months where we saw investors dumping high risk tech stocks, and Bitcoin not only did not participate, but saw buyers.

If we look back at the long-term correlation to Bitcoin and the heavily focused NASDAQ-100, you will note that the majority of times, these two investments are closer to having minimal to to no correlation. This is in contrast to being highly correlated, as many would believe.

Source: I/O Fund

The above chart measures the correlation between these two investments. The best way to read the chart is when the line is moving up, it means the two are correlated and heading in the same direction, while the inverse indicates they are moving in opposite directions. Also, when the cumulative reading is above 0.5 (green), the two investments are highly correlated, between 0.5 and -0.5 (yellow) the two have minimal to no correlation, and when the reading is below -0.5 (red) they have an inverse correlation and are moving in the opposite direction.

Considering the correlation is cumulative on a weekly scale, the two investments have to stay inversely correlated for some time in order to cross below 0. As you can see, there are significant periods where the two have been inversely correlated, which I’ve marked with the gray vertical shades.

For reference, the below chart shows the correlation between the S&P 500 and the NASDAQ-100 through the same period. While there are brief periods where the two indexes have diverged, the cumulative correlation rarely goes below 0.5% (green), and only briefly crossed the 0 line.

Source: I/O Fund

The point is to show actual data in regards to the popular narrative that Bitcoin is just another tech equity play. The data shows that the cumulative correlation has periods where it is highly correlated to tech, but what is key to understand, is that it also has extended periods where it is inversely correlated. The norm is that the two investments have had a low to no correlation, which supports the inverse move that we saw between Bitcoin and tech stocks on April 19th.

This supports a probable scenario where equities could put in a top while Bitcoin continues to run higher.

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Equities Topping While Bitcoin Goes Higher

In our March report, we showed how the current bull market leaders, the Magnificent 7, were topping, one at a time, while the broad market was continuing to push higher. At the time of the report, only 3 of the Mag 7 were making new highs with the broad market. We then saw the AI leaders within the semiconductor space, including Nvidia, top around early March, while the broad market pushed higher into April.

Seeing the bull market leaders diverge from the broad market is usually a sign of coming weakness, not strength. More times than not, we will see the leaders top first when a meaningful change in trend is about to happen, which we warned our readers about. If we were going to push higher, these leaders needed to breakout to new highs, and until then, we were at risk of a trend change.

This lines up with the potential topping pattern we are seeing within the equity markets, compared to Bitcoin, which appears to have more room to run.

Source: I/O Fund

The above chart shows the NASDAQ-100 has completed a mature 5 wave pattern off the 2022 low, and has broken the first of two major supports – 17,265 and 17,000. Bitcoin, on the other hand, is still in an incomplete 5 wave pattern, which is still tracing the 3rd wave higher. Note the current correction is taking the shape of a bull flag, and is nearly 25% above the first critical support level.

The reason for this could have several explanations. For one, it’s worth noting that the demand for Bitcoin has increased substantially, while its supply has remained the same. Spot Bitcoin ETFs have quickly become a popular investment vehicle, and have seen a surge in net inflows, surpassing more than $30B AUM in mid-April after amassing $17B in funds in less than two months after a launch in mid-January. For example, BlackRock’s iShares Bitcoin ETF recorded 71 consecutive days of net inflows. In addition, trading volume on the ETFs nearly tripled in March, reaching $111 billion – for an asset class that launched only two months prior, that’s a significant figure.

Another explanation is the fact that not all markets top and bottom at the same time. For example, small caps topped in 2021 while the NASDAQ-100 continued higher into 2024. Therefore, Bitcoin could be one of the last assets to put in a larger top, after the NASDAQ-100. This would lead to several lower highs within a large range for the NASDAQ-100, while Bitcoin makes its final series of higher highs. After which, they would align in a potential downtrend.

Another answer could be something more fundamental. Bitcoin was created to answer a specific flaw within the centralized banking system. It is fundamentally different than a tech stock, and has the potential to provide a hedge against various banking and/or currency problems that tech stocks would not be able to address. In this case, Bitcoin could be picking up on some deeper issue within the system, which is causing the potential divergence.

The other scenario is that I could be wrong, and the NASDAQ-100 holds this support region, the Mag 7 and AI Semis find more strength, and push higher with Bitcoin, or vice versa. I’m open to this, but until Bitcoin starts breaking critical support levels in a direct fashion, like most equity markets recently have, there is no reason to pivot away from a more bullish outcome in Bitcoin.

On Chain Analysis

For those that are not familiar with on-chain data, it is the unique fundamental analysis within crypto, and a relatively new field of study. We partnered with WealthUmbrella, a team of Machine Learning engineers and professors, to provide this level of analysis within the crypto space. According to WealthUmbrella, the underlying strength that our technical analysis is picking up on is also being supported within on-chain data. The below section was written by Vincent Duchaine, CEO of WealthUmbrella.

Bitcoin’s recent move to $73,000 created some of the most overbought conditions we have seen throughout Bitcoin’s history. One of the indicators used to gauge these overbought levels measures the value of Bitcoin’s network through the increase/decrease in active users.

At the recent high in Bitcoin, this indicator, which only rose briefly to a historically high value, gave us a reading of 3.3. As you can see below, this reading represents an outlier in Bitcoin history.

Source: I/O Fund

A reading this high historically leads to a top, of sorts. The good news is that the recent volatility has taken this indicator back to a reading of 0.84, which is in the lower range of what we have seen during a correction in a bull market over the last 6 years. This further confirms our long-standing outlook that the bull cycle in Bitcoin will likely move higher.

Source: I/O Fund

This extreme overbought reading was also picked up by our SOPR Indicator, which stands for the Spent Output Profit Ratio. This indicator measures the daily transactions in Bitcoin and measures if the combined ratio has a profit or loss based on when they were bought. As the indicator moves up, it is signaling that all the majority of daily transactions in Bitcoin were sold for a profit.

As you can see, this indicator also reached a historically high reading when Bitcoin first hit $73,000. However, it has greatly cooled down since and is now slowly curving to the right.

Source: I/O Fund

These two metrics were warnings that a correction was likely coming due to being extremely overbought. However, since then, we have seen them cool off to a level that suggests we could be getting close to the bottom of the current correction and resume the uptrend.

This thesis is being supported by other metrics that we track. For example, since the arrival of the new Bitcoin ETF, the amount of Bitcoin that hasn’t moved in more than a year was in a constant drop, implying that long-term holders (hodlers) were finally taking gains, which was increasing supply. This selling by the Bitcoin hodlers has since stopped since April 2nd, which you can see in the chart below.

Source: I/O Fund

Like any asset, Bitcoin's price movements are the result of supply and demand. We are now seeing long-term holders of Bitcoin cease the selling that started in late 2023. This is bullish as it creates a constraint on the supply side of the equation.

Not only are hodlers not selling, but whales have also bought the recent dips in a notable way. The below chart measures large block trades within Bitcoin. The most recent spike happened last Thursday, April 18th, when whales bought 19,700 BTC at an average price of $62.5k.

Source: I/O Fund

Regarding the demand for Bitcoin, we have historically measured this through monitoring the number of newly created Bitcoin addresses with a non-$0 balance. As new addresses are created that actively buy Bitcoin, this implies that demand is increasing. However, this is likely not as relevant in light of the new Bitcoin ETFs.

Before the creation of these ETFs, the predominant means to access Bitcoin was through the creation of wallets or personalized crypto exchange accounts. Now, an investor can simply buy an ETF on a public exchange and get access to Bitcoin’s price movements. This has now opened the door to institutional investors as well as investors who want diversification but did not want to deal with the hassle of dealing with crypto exchanges and the safety concerns that come with them. Regarding demand, this development is arguably the most important element in Bitcoin’s history, and we view as quite bullish in regards to the demand side of the price equation. Lead Tech Analyst Beth Kindig went on Fox Business News and discussed how Bitcoin has never had a more fundamentally bullish moment:

Bitcoin has never had a more fundamental bullish moment: Beth Kindig (X.com)

Bitcoin has never had a more fundamental bullish moment. I spoke with @cvpayne about the fundamentals and our new price targets for $BTC.@FoxBusiness pic.twitter.com/HcC584EXaW

— Beth Kindig (@Beth_Kindig) December 21, 2023

Source: Beth's TwitterBeth's Twitter

In summary, the internals are supporting higher levels, as we are now seeing demand start to catch up with supply. We view the current state of Bitcoin’s pullback as a buying opportunity within a larger uptrend. This is confirmed by one of our most powerful tools, which we call the Kwiatkowski Indicator, named after its creator. This tool is designed to spot tops by looking at the profit of all market participants in an organized way. It is currently indicating a value of around 12, while we don’t expect a cyclical top until 35.

Source: I/O Fund

Conclusion:

We are seeing evidence that Bitcoin wants to go higher, while equities appear to be setting for a top. Bitcoin has a history of not being correlated with tech stocks, so this scenario is not as improbable as the popular narrative would suggest. Both technical and on-chain analysis support higher levels for Bitcoin, and as long as any further weakness holds $42,750, we view this dip as a buying opportunity.

If you own crypto or are looking to own crypto stocks, consider joining us for our next broad market webinar. Every Thursday at 4:30 pm Eastern, the I/O Fund team holds a webinar for premium members to discuss how to navigate the broad market, manage risk, as well as revealing our various long-term game plans regarding stock and crypto entries and exits. We offer trade alerts plus an automated hedging signal. The I/O Fund team is one of the only audited portfolios available to individual investors. Learn more here.here.

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Crypto and AI Opportunity: Real Vision Video Interview

Posted on February 12, 2024June 30, 2026 by io-fund

I/O Fund CEO and Lead Tech Analyst Beth Kindig joins Ash Bennington, Senior Host & Crypto Editor of Real Vision to discuss her strategy, what assets she’s keen on, how she manages risk, and much more.

Some of the key takeaways are:

I/O Fund has worked diligently for many years and developed an investment framework using technical analysis for crypto. This data-driven approach helps mitigate risk and identify opportunities for upside potential, especially in the absence of traditional earnings reports. By basing decisions on objective data using technical analysis rather than emotions, we aim to deliver consistent returns for our investors.
Bitcoin is the best alternative to fiat currency. It has got a good store of value. Some of the highest adoption rates of Bitcoin are in countries with high inflation. Bitcoin has already reached the stage of product market fit.
We established our thesis in 2019 that Bitcoin would make a good investment due to its growing institutional adoption. Additionally, now the technical indicators are also lining up, creating a winning combination. With the product, fundamentals, and technical signals lining up, that’s the right movement for tech investors.
We identified the potential of Nvidia in the AI space earlier than most, publicly outlining our bullish thesis in 2018 when the market remained skeptical. This early conviction in Nvidia has helped us in our portfolio return outperformance.
Bitcoin is the best-performing asset. The bears are missing the fact that Bitcoin is very secure due its decentralization.
Our portfolio outperformance has come from the proper allocation, risk management, and adherence to the technical analysis.

Below are the key takeaways from the Real Vision: State of Tech

Tech is overvalued; we are not buyers right now except for Crypto. The Buffet Indicator model indicates that the market is overvalued. The P/E model for valuations suggest that the market has not traded higher than the dot.com bust or the 2021 sell-off.
The data does not support Big Tech trading higher. So, the risk is not worth it.
The probability of a pullback is high since many Cloud stocks are trading above the 20 P/S ratio, which is a risky.
AI has a long way. Automotive is an 8x opportunity for semiconductors since cars will undergo massive upgrade cycle.
Despite VCs often avoiding hardware due to its complexity, our expertise in this sector allows us to identify promising semiconductor companies with the potential to outperform software peers in the long run.

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I/O Fund Crypto – Updated Technical Analysis

Posted on February 2, 2024June 30, 2026 by io-fund

The I/O Fund has been an advocate of technical analysis since inception. Sentiment is a major driver in growth, and the only way to measure it with some accuracy is through technical analysis.

While we use this practice as an addendum to our fundamental analysis, it is the primary tool that we use within crypto. The reason for this is that crypto does not have consensus estimates or earnings reports. There are sparse news events regarding crypto, yet we tend to see wild swings in both directions. Though these moves may seem random, they are not. And, because of this reality within the crypto space, we lean into technical analysis more so than with equities.

In this report, you will get a snapshot of the larger pattern we believe is playing out, as well as the I/O Fund’s buy plans for each of our 3 crypto holdings, plus one new addition that we are watching – Solana.

Bitcoin (BTCUSD)

If we zoom out to a weekly chart, The larger pattern I am following has the 2021-2022 bear market as a correction within a larger uptrend. That would put us around the halfway point for the final 5th wave rally, which should take us to the $100,000 region.

The risk remains elevated until Bitcoin goes vertical. The current pattern off the 2022 low is only 3 waves up. Because the new bull cycle is only 3 waves, it leaves the door open to the possibility that the 2023 bull cycle is actually a correction within a larger bear market. As long as any further weakness in Bitcoin holds above $25,100 we see no need to game plan for this more bearish potential.

If we zoom into the new bull market structure, there are three paths this new bull cycle can take.

Red Count – This path has us in a large degree 3 wave pattern, marked with an (A), (B), (C). Here, we should see a deep retrace back into the $35,000 – $27,000 region. This will complete the (B) wave drop, as the following (C) wave will take us to our overhead targets.
Green Count – This path has the current bull cycle taking a standard 5 wave pattern. If this is in play, we should see the current bounce fail under $47,000, then drop back to the $37,000 – $36,000 range. We should then turn back up in a vertical move higher. This will be a more direct path to our overhead targets.
Blue Count – This is a more bullish variation of the Green path. This path will not see a further drop. Instead, we will see a direct breakout over $47,000 and head to $56,000 next.

These are all bullish interpretations of the current price structure. As long as any further weakness holds $25,100, then I see no reason to abandon these outcomes. Below this critical support, and the bull cycle that is targeting $100,000, is in jeopardy of not playing out. This would imply that all of 2023 was a large degree corrective bounce in a much larger bear market. The early tell will be a 5 wave drop through some of our listed supports.

Ethereum (ETHUSD)

All coins that we follow are tracking the larger crypto cycle that is expressed above through Bitcoin. Ethereum also has a large degree bullish pattern that is playing out.

When it comes to the potential bullish patterns, we find it helpful to always take it one step at a time. As of now, we are in a minor correction that must hold $1,650, then turn back up in a vertical fashion. If this happens, we will raise our critical support and fine tune our overhead targets.

When we zoom in on this pullback, we can get a better idea of potential targets.

It looks like ETHUSD needs one more drop toward the $2000 region in order to complete this pullback. If we instead continue to push higher, we will need to break above $2592 in order to suggest this correction is over. We could even see Ethereum push toward $1845 and $1645 and still maintain the bullish uptrend. However, below $1650 will threaten the larger bullish count we are tracking.

Chainlink (LINKUSD)

The larger pattern has LINKUSD in the 5th wave of a very large diagonal pattern. The 5th wave should play out as a large 3 wave pattern, marked A,B,C on the chart below.

If we zoom into the current uptrend, it appears to be developing into a solid 5 wave pattern. This is encouraging, and supports the bigger pattern above.

The current breakout above $17.60, if it holds, should see a move to the $20 – $23 region. This should complete the 1st series of 5 wave moves higher, and then give way to a notable pullback.

Solana (SOLUSD)

Note how vertical the uptrend in SOLUSD is. It is clearly a 5 wave pattern, that is incomplete. This is supportive of higher levels.

It appears that the correction has completed, and we are making a higher low before pushing into the $130 – $140 region. Ideally, we will get one more drop into the low $90 – upper $80 region. Any further weakness needs to hold $84, or we could see a deeper retrace back into the $70s. the critical support for SOLUSD is the $60 region. This level must hold if the larger uptrend is going to continue.

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Coinbase, Robinhood: Examining The Impact Of Spot Bitcoin ETFs

Posted on January 30, 2024June 30, 2026 by io-fund

This article was originally published on Forbes on Jan 25, 2024,05:31pm ESTForbes Forbes on Jan 25, 2024,05:31pm EST

The SEC approved nearly a dozen spot Bitcoin ETFs on January 10 in what was heralded as a “watershed” moment for the crypto industry, opening the door for investors to gain exposure to Bitcoin without directly holding it. It’s widely expected that this approval and subsequent widespread access for institutions and retail investors will shape up to be one of the most bullish fundamental moments in Bitcoin’s history.

We have been anticipating this moment since 2019 when we stated: “One of the biggest hurdles for institutions, however, is not the idea of a world run on digital currencies, but rather the decentralization concept and the need for cryptocurrency storage. Institutional investors need to know the assets are secure, insured, and under the care of a trusted third party, per SEC rules, which requires advisers to keep client funds with a qualified custodian.”

With a first batch of spot BTC ETFs approved, it’s prudent to assess the potential impact to exchanges and platforms, given that exchanges will now be competing on fees with ETFs, while increasing BTC prices and the next halving serve as potential tailwinds for miners.

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Trading Volumes Have Declined Significantly for Coinbase, Robinhood

For exchanges and trading platforms, such as Coinbase and Robinhood, that allow direct ownership of Bitcoin and other cryptocurrencies, the ETF approval serves as a double-edged sword. The bull thesis is centered around how the approvals will help usher in a wave to new all-time highs for Bitcoin, and how that could translate into higher transaction revenues (which have declined significantly), while the main headwind and primary story is that the two may now be forced to compete on fees in the long run, which can keep transaction revenues depressed as trading volumes remain far below peak levels.

Coinbase has expressed no desire to change its fee structure to compete with ETFs in the immediate term, per President and COO Emilie Choi’s remarks in its Q3 earnings call:

Q: “Will Coinbase consider reducing transaction fees to make them more competitive with other platforms where ETFs are being traded at significantly lower prices?”

A: “We have no current plans to reduce transaction fees because of ETFs. If you just zoom out a little bit, spot ETF should be a positive catalyst for the entire crypto space. They should add credibility to the market, and we should see increased liquidity and market stability as we've seen with other asset classes such as gold.”have no current plans to reduce transaction fees because of ETFs. If you just zoom out a little bit, spot ETF should be a positive catalyst for the entire crypto space. They should add credibility to the market, and we should see increased liquidity and market stability as we've seen with other asset classes such as gold.”

Choi’s answer hinted towards a potential headwind to Coinbase’s model – market stability. Coinbase noted that in Q3, “crypto asset volatility, a driver of our trading business, continued to decline, and it reached levels that we haven't measured since 2016.”

Source: GOOGLE FINANCE

A majority of Q3 witnessed little to no volatility in Bitcoin prices – August saw one decline of more than (10%) and a 6% rise, but aside from that, prices were relatively stable. Volatility heightened in October as Bitcoin broke the $30,000 mark and ascended towards $35,000, while the remainder of Q4 witnessed relatively heightened volatility as well.

Due to stable crypto prices, Coinbase’s trading volume dipped more than (17%) QoQ and (52%) YoY to $76 billion in the quarter, while transaction revenues declined nearly (12%) QoQ and (21%) YoY to $289 million.

Heightened crypto volatility is a primary driver of Coinbase’s trading business, so periods with less volatility, i.e. stability, correlate to lower trading volumes and transaction revenues. Coinbase noted that its October transaction revenue was $105 million (around 9% higher than Q3’s monthly average), but cautioned investors not to extrapolate that figure for Q4. If you do extrapolate that sum, Q4’s transaction revenues would fall between $310 million to $320 million, signaling flat to a low single-digit YoY decline in transaction revenue despite an ~80% rally in Bitcoin.

In a broader view, both trading volume and transaction revenue have declined significantly since peaking in Q4 2021, when Bitcoin made a round trip from $47,000 to new highs above $64,000 before pulling back to $47,000. Trading volumes in Q3 were nearly (83%) lower than Q4 2021, at $76 billion compared to $547 billion.

Source: COINBASE

Transaction revenues similarly are down more than (87%) since then, with five straight quarters below $400 million. Transaction revenues accounted for more than 46% of Coinbase’s total revenue in Q3, so there is heightened risk to Coinbase’s model now that a fee-competitive asset class exists, as it may potentially draw away trading volume and thus transaction revenue via lower fees.

Source: COINBASE

Monthly transacting users have also declined (40%), from 11.2 million in Q4 2021 to 6.7 million in Q3 2023, with the decline accelerating over the past two quarters.

Source: COINBASE

These trends in trading volumes and transaction revenues are not exclusive to Coinbase, as Robinhood is reporting similar weaknesses in both metrics.

Robinhood’s notional crypto trading volume was ~$6.8 billion in Q3, a (25%) QoQ and (53%) YoY decline. Since Q4 2021, trading volume has fallen (85%), interestingly nearly the exact percentage drawdown as Coinbase.

Source: ROBINHOOD

Transaction revenues peaked in Q2 2021 for Robinhood at $233 million, before plunging to $51 million the next quarter; unlike Coinbase, Robinhood did not see a second higher peak in transaction revenue. For Q3 2023, Robinhood reported $23 million in transaction revenue, representing a (26%) QoQ and (55%) YoY decline; unlike Coinbase, crypto transaction revenues are under 5% of Robinhood’s total revenue, so there is less risk from ETFs, as investors could choose to invest in the ETFs directly on Robinhood’s platform.

Source: ROBINHOOD

Robinhood hinted that it is more willing to be competitive on fees, saying that it rolled out some UI changes in Q3 so its crypto customers “can clearly see the spreads that we offer on our crypto transactions. This makes it easier for customers to see their all-in cost of execution, compare it against other platforms and see how great of a deal Robinhood is giving them.” see their all-in cost of execution, compare it against other platforms and see how great of a deal Robinhood is giving them.” By focusing on offering a better deal than competitors, Robinhood is potentially limiting upside to transaction revenues via a lower average fee – its average fee rate in Q3 of 0.338% was more than 10% lower than Coinbase’s average fee rate of 0.380%.

With a basket of ETFs now approved, Robinhood and Coinbase will have to compete on fees, as certain classes of investors are likely to choose ETFs over directly holding crypto for exposure due to trust. In just the first week after the approval of the ETFs, we’ve seen strong demand for top of the class funds: BlackRock’s iShares Bitcoin Trust has surpassed $1 billion AUM in its first week, a rare milestone that few ETFs share.

This is the first major speed bump for the bull case – how Coinbase and Robinhood can find ways to drive trading volumes higher, while maintaining higher fees than ETFs, to drive an inflection in transaction revenues.

Retail trading accounts for more than 95% of Coinbase’s transaction revenue while accounting for less than 15% of trading volume – this suggests that to drive a meaningful uptick in transaction revenues, Coinbase will need to see strong growth in retail trading volumes. More volatile Bitcoin prices, or a run to higher highs, can serve as a catalyst for higher trading activity; however, Coinbase holds the view that the ETFs will lead to more stability in the market, meaning more investors may choose to buy and hold with less active trading.

Custodial Fee Benefits & Risk for Coinbase

The ETF approvals offer one direct benefit to Coinbase, in that it stands to earn custodial fees by serving as the custodian for 8 of the 11 approved ETFs, including the most popular of the class, the iShares Bitcoin Trust.

Source: BLOOMBERG

Coinbase will be providing custodial, trading and lending services to the ETF issuers, giving it a stream of revenue via fees for these services, but opening up the door to a significant concentration of risk. Custodial fees currently account for ~2.5% of Coinbase’s revenue at less than $16 million in Q3, leaving opportunity for significant growth via ETFs – however, impacts from ETFs will not be visible until Q1 earnings, given the recent launch date.

Serving as the sole custodian for more than three-quarters of the approved ETFs heightens risks to investors, as a security compromise, hack or other operational failure on Coinbase’s part could significantly impact the ETF’s value or increase difficulty in accessing funds.

A multi-custodian approach helps safeguard investor assets by reducing the dependency on a single entity for providing all of the necessary services for an ETF to function. Therefore, it is likely that these ETFs, and other approved ETFs, will diversify away from relying on Coinbase as a sole custodian to having multiple custodians. This could reduce custodial fees should Coinbase lose its status as custodian for more than 75% of spot Bitcoin ETFs.

Conclusion

The approval of the spot Bitcoin ETFs is expected a game-changer for crypto, as it is widely believed that the approval and subsequent widespread access for institutions and retail investors will shape up to be one of the most bullish fundamental moments in Bitcoin’s history.

To attempt to size the demand the ETFs may create, Grayscale has $18 billion assets under management, and iShares has surpassed $1 billion already. If we assume over the long run that these Bitcoin ETFs average $5 to $8 billion AUM, this could add an additional $55 to $90 billion in demand for a limited supply of Bitcoin. As a reminder, Bitcoin is limited to 21 million Bitcoins and the next halving occurs in 2024. Halving can lead to a higher value for Bitcoin as it reduces the number of new bitcoins being generated by the network.

A push to new all-time highs for Bitcoin sits at the core of the bull thesis for crypto platforms such as Coinbase, as higher prices theoretically would lead to higher volatility and thus higher trading volumes and higher transaction revenues. Even with Bitcoin’s 80% push back to the high $40,000 level, Coinbase’s clues suggest that transaction revenues may not meaningfully accelerate in the high-teen to low-20% range.

Given this substantial decline in trading volume and resulting declines in transaction revenue for both Coinbase and Robinhood, the bull case centered around ETF approval ushering in strong revenue growth is weakened. There are many moving parts with how the ETFs will alter the crypto landscape, but unless both platforms witness trading volume more than double over the next few quarters, it is hard to see how this creation of a fee-competitive environment can serve as a tailwind to revenue growth over the short to medium-term.

If you own crypto stocks or Bitcoin, or are looking to own crypto stocks and Bitcoin, we encourage you to attend our weekly premium webinars, held every Thursday at 4:30 pm EST for premium members to discuss how to navigate the broad market, as well as various stock entries and exits. We offer trade alerts plus an automated hedging signal. The I/O Fund team is one of the only audited portfolios available to individual investors. Learn more here.

Please note: The I/O Fund conducts research and draws conclusions for the Fund’s positions. We then share that information with our readers. This is not a guarantee of a stock’s performance. Please consult your personal financial advisor before buying any stock in the companies mentioned in this analysis.

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Bitcoin and Microsoft Positions Update

Posted on January 20, 2024June 30, 2026 by io-fund

The below 2-week chart in Bitcoin has been quite accurate at identifying the cycles that have caused a trend change. This chart shows the next two cycles as April 10 – 25, and June 7 – 2. What will matter the most here is how we trend into these time factors. I'm forecasting that we see weakness into one of these regions. It also shows the levels (on the right) where we will be layering in. We will set up limit orders for these buys, 2% at each level. BTC trades 24/7 and loves to spike and reverse at lows. So, we've found limits are the best answer for this. This means that you may receive a trade notification on Sunday morning from a limit that hit while we were sleeping. So, be prepared for that.

The below chart shows the bigger counts I'm tracking. The blue count is my primary. Here, we will see a multi-week/month drop into the $35K – $27K region (likely into one of the time factors listed). My backup is the green count, which has us in a 4th wave of a larger 3rd. This will bottom between $40K – $38K, hence our buying at these regions. I don't know what count will play out. The cycle work suggests the blue. However, if we are in a 3rd wave, expect to be left behind with shallow pullbacks. So, we will keep layering in at each support zone. The red count will be taken more seriously if we see a 5 wave drop below $34,800. If this happens, and it is followed by a 3 wave retrace, be prepared to exit crypto.

Microsoft

MSFT hit our first target at $395. We are now in a 5th of a 5th of a 5th of a 5th wave. It's best to wait and see how we correct and if we break below $370.

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Bitcoin: Setting Up for a Strong 2024Bitcoin: Setting Up for a Strong 2024

Positions Update: Bitcoin, Microsoft, and NvidiaPositions Update: Bitcoin, Microsoft, and Nvidia

Positions Update: Bitcoin, Microsoft, and Nvidia

Posted on January 12, 2024June 30, 2026 by io-fund

Bitcoin

Here is the big picture. The data best fits with a very large degree ending diagonal pattern for the bull cycle that started in 2018. This means that each wave is a 3 wave pattern (A,B,C). If true, then we are in the 5th wave and still in the A wave.

This makes sense to me, and also lines up with equities – high in Jan/Feb, multi-month pullback into mid 2024 (B wave), blowoff into 2025 (C wave). I don't see equities giving a blowoff into 2025, so there will be a decoupling at some point. This lines up with the time factor chart below. We're looking at a 2 week chart, so each time factor tends to be more notable. There are 4 time factors clustering together right now and we are trending up into them. Now, note the huge cluster in June/July. If we see a top in the $50K region and then turn back down, this will be where we look for the B wave low.

This sounds great, and is a solid game plan. However, we have to account for alternative scenarios. If we instead just go vertical through $58,000, then we will invalidate the blue count and red count, and instead be in a direct move toward our target. This would constitute a breakout buy, as we would be in the mid-point of the larger trend higher. This would be the green count below. I would not take red seriously until we pullback from the $50K region in a 5 wave drop. This count suggests that we are still in a large degree bear cycle and topping. Not my primary.

Now, if we zoom in even closer, if we are heading to the $50K region, the 5th wave is an ending diagonal. The problem is that we could also be in an expanded flat correction too! Keep in mind that ETH is not confirming this breakout. So, as long as we stay below $48,500, this is a possibility (orange count). If we do drop in an expanded flat, we'll go below $44,500 in a 5 wave pattern. If so, we'll go heavy in the high $30,000 range.

So, there is a lot going on! My base case is a top soon, followed by a large pullback. If we get this, we'll stick with the plan in the blue count. If we go vertical, then we chase above $58,000.

Microsoft

We now have the 5th wave in. Keep in mind, this is the 5th wave of a 5th wave of a 5th wave, which started in 2009. That $370 level is the major floor. It's where the largest trade in MSFT's history printed. Big money either bought or sold, and considering the price patterns, it's likely a sell. You will know this when a drop below that level does not get defended.

Nvidia

We're in our long-term target zone, finally. This is the 5th wave, and based on what I'm seeing in the above charts, I don't see the green count playing out. However, this is a large first wave off the October 2022 low. This means a deep retrace will be the buying opportunity we have been patiently waiting for.

Advanced Signals Members receive real-time trade alerts for our entries and in-depth technical analysis from the Portfolio Manager, Knox Ridley. Learn more here.here.

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2023 Chainlink Update: Interoperability for Blockchains, Bullish SWIFT Partnership

Posted on December 28, 2023June 30, 2026 by io-fund

The I/O Fund has done some bold things, such as offer an audited portfolio to retail investors, call Nvidia an AI stock five years ago, and, at times, have hedged 100% of the portfolio in 2022 with the help of The Wealth Umbrella.

However, probably more bold than any of those was the decision to hold an altcoin permanently in our portfolio. This was done within a month after launching our site, when Bitcoin was on a downward trajectory, and we were up against an extremely high failure rate in altcoins. Chainlink had launched on Ethereum mainnet about three months prior to covering the token.

Some of my readers are averse to crypto, and for good reason as it can be extraordinarily volatile, so that is everyone’s personal choice to make. However, the number of stocks we’ve held without interruption since the day we launched our site four years ago is very few, not even Microsoft makes that list. But, Chainlink does.

With that introduction, I’d like to update my analysis as Chainlink has expanded from working with off-chain data to now also include cross-chain token transfers and messages. The broader vision is that Chainlink will become the blockchain backbone for the financial system, accomplished by partnering with SWIFT, the system that currently allows 10,000 banks and financial institutions to communicate with one another.

The Internet of Contracts

Before discussing how Chainlink is becoming a single access point for tokenized assets, and why this is needed by the banking system, it’s important to review smart contracts. Chainlink rephrased this to “the internet of contracts” and I think this describes smart contracts succinctly as Web3 proposes to replace the internet, but to do so in a secure, decentralized manner.

Decentralized systems require contracts if a system is to be created where all data, all messages, all token transfers, and all users are validated. Machines need contracts to offer ultimate security and decentralization as contracts ultimately allow for a revocation if a request if found to be fraudulent. In this case, the machine can shut the request down or otherwise deny the user/token transfer/data/message to move forward. The bilateral nature of contracts allows for a validation process to where nodes can determine if the action is trustworthy.

To put it simply, without contracts, trusted systems cannot truly exist as otherwise there is no penalty. This is why Web2, which is not based on smart contracts, is rife with bad actors. One centralized system can create thousands of bots, or a centralized tech company can push its agenda to the top of a newsfeed. There is no contract, and therefore, there is no revocation for unethical behavior.

The bot or the centralized Big Tech company simply does it again and again. In the vision of Web3, even the special interests of a powerful Big Tech company would not be able to dominate a newsfeed, rather all users would be equal and have to prove they are acting in an ethical manner in terms of how messages rank in the newsfeed.

Right now, you can assume what you’re seeing in newsfeeds and on search engines is ranked according to what Big Tech wants you to see and think – you will see more AI news because Big Tech wants you to support AI. You will see favorable news about their own companies because this ultimately helps their stock. We are coming into an election year, the candidates that most support Big Tech’s ambitions to further monopolize and offshore taxes will be seen favorably and/or rank at the top of a newsfeed. If you feel like there isn’t a problem with censorship, then perhaps consider that Big Tech has used its thousands of engineers and done its job quite well, which is to make it look as though it’s not even happening.

That’s the inspirational explanation of smart contracts. We’ve also covered the broader picture in a 1-Hour Intensive Webinar on Chainlink here. For those who want to take a trip down memory lane, here is the original PDF we published back when we published PDFs.

The more technical explanation is that rather than having backend code on a centralized server, backend code runs on a decentralized network, such as the Ethereum platform. Developers use a blockchain like Ethereum for data storage and smart contracts for the app logic. Chainlink was primarily built for off chain data for non-currency smart contracts. The principal is the same where there is a set of rules which self-execute – the more common analogy is that it operates like a vending machine to where there is no middleman.

Decentralized applications (Dapps) rely on smart contracts. Dapps deployed on the Ethereum network are controlled by logic written into the smart contract and cannot be altered by the developer. Smart contracts function like APIs (this was also discussed in the Chainlink webinar). This allows applications to build on one another similar to the way applications use APIs today; except blockchain applications will build on smart contracts.

The front-end application can be written in any language with calls made to the backend. The main qualities are that the applications are decentralized, can perform any action given the required resources (whereas Bitcoin is not Turing complete) and are executed in a virtual environment such as the Ethereum Virtual Machine. The virtual machine acts as a buffer to where if the application is faulty, it does not affect the blockchain network.

There are a few key benefits to dapps:

Dapps are more secure and inherently protected from denial-of-service attacks.
Censorship will be nearly impossible as a single entity will not be able to block users from utilizing the blockchain.
Fraud and other malice will be prevented as the data has complete integrity from the decentralized and cryptographic qualities of the blockchain.
Because smart contracts are self-executing, they remove the need for a centralized institution. Real world identities can also be anonymous with dapps.

There are also some drawbacks to dapps:

Most developers do not want to relinquish control over their creation
If there is a bug that need to be fixed, that developer is unable to take back control of the Dapp once it’s launched onto the Blockchain
Dapps will need to prove they can scale on Layer 1s with Ethereum’s Proof of Stake largely untested in the real world in terms of scaling to tens of millions or even hundreds of millions of users. Layer 1s such as Solana are competing with Ethereum specifically on its scalability.
Some developers may utilize centralized servers for the frontend or to store business logic which could eliminate many of the decentralized security/anonymity benefits of the blockchain.

Oracles:

The issue with smart contracts and the proposed use cases for the blockchain is … where will we get the off-chain data, which is key contractual data? When you go to trade a stock, where will the blockchain get the stock price in a way that is trusted, since this is off-chain data. Right now, in other applications, these are done through APIs which act as building blocks so the developer does not have to build the input/output.

Oracles are trusted third-parties that retrieve off-chain information and push that information to the blockchain at predetermined times. Oracles introduce a potential point of failure, however, and this is why Chainlink is critical middleware for Layer 1s.

Without Chainlink, Ethereum’s smart contract utility is confined to currency tokens on its Layer 1 only as data cannot be directly fetched from off the blockchain. The only secure input that can power smart contracts is data that exists on the Ethereum blockchain, which is token inflows/outflows. This becomes problematic for cross-chain token transfers as price also needs to be verified outside the Ethereum blockchain.

Chainlink uses decentralized oracles to solve the smart contract connectivity problem, which is that a smart contract needs to interact with external data feeds that are secure and trusted. There are many inputs and outputs in the form of data feeds and APIs, rather what Chainlink solves is a tamper-proof way of triggering smart contracts with events and data that is tamper-proof.

Decentralized Oracle Networks (DONs) are multiple, independent oracle nodes that incorporate three layers of decentralization: at the data source, at the individual node operator, and at the oracle network levels.

Cross-Chain Interoperability Protocol (CCIP)

Blockchains are fragmented, and naturally prefer to have users locked into their ecosystem. This is problematic as each blockchain and DeFi application has unique strengths, and thus, users often seek to use more than one blockchain and dozens of applications depending on their needs.

This is best illustrated with token transfers. The process to liquidate Bitcoin and buy another altcoin on a DeFi platform is time consuming and overly complicated. This friction is a primary pain point causing a low user adoption rate for crypto.

Clearly, cryptocurrency has its loyal enthusiasts, but what innovation needs is outsized demand. In tech, there is plenty of innovation and supply, whereas demand is the part of the equation that is much, much harder to solve. The friction that exists with transfers for currency and information, plus the overall user experience, must be solved for Web3 to become a replacement for Web2.

This means that Web3 must function seamlessly like Web2 to where the infrastructure (AWS, Azure, GCP), the protocols (TCP/IP, SMTP) the operating systems (Windows, Linux, MacOS, Android, iOS), the applications and the software are seamlessly working together without friction. In the majority of these cases, the user is unaware of the systems that support the user experience.

Chainlink’s CCIP sets out to solve this by providing a bridge between blockchains and DeFi applications. The protocol was launched in July of 2023 to solve the pain point of seamlessly transferring data and currencies across various blockchain networks. At launch, it was integrated with Ethereum, Avalanche, Polygon and Optimism. This allows users to use any decentralized application (dApp) on these blockchains for liquidity purposes and connectivity.

This is not a new concept, rather how it’s approached is what has evolved. Sidechains for popular applications, such as the popular game Axie Infinity, were developed to transfer assets between the game and Ethereum. This allowed Ether to be used for purchases and to also pay gamers with rewards. The sidechain called Ronin Bridge was secured by only 9 nodes, and hackers were able to compromise 4 of these nodes and exploit $25 million worth of Ether.

Clearly, any bridge needs to be handled carefully as this is one of a few hacks which occurred when developers attempted to develop a solution. However, in the past, dApps had to build in-house implementations for cross-chain interactions, which puts immense pressure on application developers to also provide secure interoperability.

At the time, it was presumed that decentralized was inherently “secure enough,” yet this has been debunked as bad actors only need to control the majority of the nodes. With enough incentive, such as $25 million worth of Ether, Ronin Bridge proved this can be accomplished.

This represents the issue for a popular gaming application, but a similar issue exists for banks and institutional investors. The fragmented layer 1 blockchain networks that compete with one another are not interoperable and each has their own functionality and liquidity profile. This creates friction and potentially security issues if layer 2s or sidechains are needed for token transfers or swaps.

Chainlink is uniquely positioned to solve the problem of bridging blockchains and popular applications because it has built a secure oracle network. CCIP extends the idea of an oracle network, which was originally designed to on-load off-chain data, to also offer decentralized oracle computation for performance histories and to monitor for malicious activity. Off-Chain Reporting (OCR) is used to aggregate a report from many validators, which reduces congestion.

In conversational terms, what this means is that Chainlink was once thought of as the Google of Web3, which it can still very well be. However, Chainlink is also evolving to become a critical security layer, which in turn, is what’s needed for blockchains to become attractive for banks.

The financial system has different goals for blockchains than Web3, which is to reduce fees and reduce fraud. What will likely unfold is that there is more urgency with the financial system than there is with Web2 users to advance crypto forward. Web2 users are fairly comfortable with the internet and native mobile apps they use today. Meanwhile, the financial system has serious pain points that blockchains can solve.

Instead of Chainlink only working with off-chain data, CCIP extends its use to include token transfers and messages. The broader vision is that this will be accomplished by partnering with SWIFT, the system that currently allows banks and financial institutions to communicate with one another.

SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications (SWIFT) and is the system used by banks and institutions for money and security transfers. Currently, 11,000 banks use SWIFT across 200 countries, and it’s the largest and most streamlined payment system for international transfers. SWIFT facilities secure and efficient communication between institutions with 45 million messages sent in 2022.

Recently, SWIFT successfully completed a test using Chainlink’s CCIP to facilitate transactions with tokenized assets on public and private blockchains using back-end systems. This allows financial institutions to integrate blockchain technology into the existing infrastructure. You can read more about this on Swift’s website here.

The test was done with 10 banks initially to test the settlement process. Findings included a need for nonce management, which refers to transactions being mined in sequence. This acts as a counter for the number of transactions sent by an address, which ultimately helps choose the order that transactions are processed and prevents replay attacks.

Pictured above: By including a timestamp or a nonce, only one transaction is authorized.

Crypto nonces prevent replay attacks where a hacker on the network attempts to replay someone’s credentials or retransmit the login request to the bank server.

Another component to security that Chainlink provides is an abstraction layer. Payment abstraction layers are important because it provides the value of the token that is being paid. As a decentralized oracle network, Chainlink is the industry leader in providing price oracles. Chainlink’s data oracles provide the data that assigns value to cross-chain token transfers, and this is a primary reason SWIFT is partnering with Chainlink. Ultimately, a payment abstraction layer will allow users to pay with a credit card, a bank account, a native blockchain token, a stable coin, or a protocol token – safely and securely.

Chainlink’s Early Success

Chainlink launched on the Ethereum mainnet on May 30th, 2019. We covered the altcoin for the first time in August of 2019.

Prior to launch, Chainlink signed 30 partnerships. By 2020, when we covered Chainlink a second time, total value secured (TVS) had grown from $254 million to $6.3 billion, or 23,000% growth in TVS. At crypto’s peak in Nov of 2021, Chainlink had $75 billion in total value secured across up to 1500 protocols and hundreds of DeFi applications. This has declined to $17 billion today, yet the TVS from 2021 is important as it shows Chainlink is capable of securing $75 billion without a hack. As the CEO stated recently at SmartCon: “Right now, the Chainlink Network has provided the most cryptographic truth in history.”

To date, there has been 10.3 billion data points delivered on-chain. When taking the sum of the USD value of each transaction that has utilized an oracle, the transaction value enabled (TVE) by Chainlink is $8.68 trillion. As stated, there’s been no hacks or otherwise any tokens lost through Chainlink’s secure network.

There have been many oracle solutions launched to compete with Chainlink yet the company has retained 50% or greater market share. The predominant use of Chainlink is for market data for DeFi apps. DeFi apps have grown in total value locked (TVL) from $700 million in December of 2019 to mor than $200 billion today. With the launch of CCIP, Chainlink can use its strong track record in securing DeFi blockchain smart contracts to expand to cross-chain smart contracts.

Tokenomics

One area where critics find fault with Chainlink is the tokenomics. The monthly growth in Chainlink’s circulating supply is at 1.4% per month on average. Over the course of a year, this can dilute token holders 10 to 15%, on average.

Chainlink’s fully diluted market cap tracks 2.1X higher than its current market cap. There is a circulating supply of 568M tokens yet a max supply of 1 billion tokens.

Of the 1 billion tokens, at the initial coin offering, a little more than one-third was to go to node operators, a little more than one-third was sold in the public sale, and a little less than one-third went to the company to be held in reserves. The 350 million held at the company can be released anytime, which dilutes token holders.

When more of Chainlink’s supply is in circulation, there is likely to be stronger price action. About 56% is in circulation now, and so look for Chainlink’s price to be less volatile in 2-3 years if we assume the 1.4% per month rate in circulating supply continues.

Technicals, Technicals, Technicals:

I was recently on a Real Vision interview where they asked me what my investment framework for crypto is and I said: “Technicals, technicals, technicals.” If you want to buy Apple or Microsoft without using technicals, and hold over a long period, that will probably work out just fine. But to participate in these extraordinary companies at an early stage, it’s of ample importance to carefully consider technicals.

We lead with technicals on crypto given it’s early-stage tech. This is different than stocks, where fundamentals lead. The good news is that crypto is sentiment driven, and so it respects price and technicals work quite well when managing these positions.

Our history with Chainlink is quite good – we bought at $1.50 and trimmed in the $25 to $50 range, and then began buying again much lower in the $7 to $11 range.

Below, is Knox Ridley’s update on Chainlink. I asked him to provide an update on Ethereum and Bitcoin, as well, for one comprehensive view of our crypto buying plan. Real-time trade alerts are sent to Advanced Members.

Technical Analysis

By Knox Ridley

Chainlink (LINKUSD)

From a long-term perspective, Chianlink appears to be tracing a diagonal pattern. This is an overlapping uptrend that consists of 5 large wave. These are quite tricky, and exhausting to maneuver due to the relatively large swings in both directions. That being said, the recent bear market, within this context, was only correction within the larger uptrend pattern.

If we zoom in to the recent uptrend, it is moving in a more vertical manner than prior swings and taking the form of a 5 wave pattern that is incomplete. That means that we should see one more drop, then a continuation higher to complete the patter. The current correction appears to have one more drop in it that would be targeting the $12.8 – $10.75 region.

I do not want to see this drop go below $10.5, or else the next swing higher could be in jeopardy. If this happens, I still believe the larger uptrend is still intact, just taking an alternative route to our overhead targets.

On the other hand, there is a chance that the 4th wave is incomplete. If this is playing out and we do not get that final swing lower, then a break above $16.50 will be the signal that we are going directly to the $20 – $22 region next.

Bitcoin (BTCUSD)

From a long-term perspective, the 2022 bear market appears to be a correction within a much larger uptrend that started in late 2018. This uptrend is taking the shape of a 5 wave pattern that should hit the $100,000 – $130,000 target before putting in a bigger top. As of now, this pattern remains valid as long as we hold the $28,000 support level.

If we zoom into the pattern off the 2023 low, what is important to notice is the series of vertical moves higher, which are followed by overlapping corrections. In short, we see higher highs and higher lows, repeating over and over again. This is the hallmark of a classic uptrend.

It is our belief that the current pullback will be one of the last great buying opportunities before investors are forced to chase Bitcoin higher. Bitcoin is now setting up for another correction within this uptrend. Our targets are $38,000 – $35,000 for the most likely spot to find a bottom. However, we can see this drop go as low as $28,000 and still not threaten the larger uptrend we are tracking.

If these levels hold, the next move in Bitcoin should be vertical, which would be targeting the $50,000 – $58,000 region overhead. This will be the last big test for Bitcoin before confirming that we are heading to the $100,000 target.

I’m calling this region the “danger zones” because this is where my alternative count in red would likely top, if it is in play. This count suggests that 2023 was actually a corrective bounce in a much larger downtrend. If this is true, what will follow is a continuation of the bear market to new lows. So, how Bitcoin reacts in this region will be crucial for proper risk management of this position.

In summary, in order to reach the target we outlined over a year ago, there are many steps that Bitcoin has to take in order to get there. So far, it has pushed higher with many vertical moves, and held critical support on the pullbacks. In order for this target to remain valid, we need to hold $28,000 on any deeper pullback than expected, and then break above $58,000 on the next vertical move higher. If Bitcoin fails to make these two steps, then we will be forced to pivot, log our gains in Bitcoin, and regroup.

Ethereum (ETHUSD)

The larger pattern in Ethereum is similar to Bitcoin. The 2022 bear market was likely a downtrend in a much larger uptrend that is still playing out.

If we zoom into the bull market off the low, the posture appears to be in a notably bullish posture. Note the series of vertical moves higher, followed by overlapping corrections that make a higher low. There are three series of 5 wave moves higher that have held the below trend line. My targets for the next pullback are between $2,000 – $1,850. If we get a deeper pullback than expected, we must hold that below trendline, which comes into play around $1,700.

Like Bitcoin, the big test will be the overhead “danger zone” in red. If Etehreum can break above this region at $4,450, there will be little resistance as we move towards our targets around $8,000.

Conclusion:

The broader vision is that Chainlink’s Network and CCIP infrastructure will allow developers to build smart contracts with code across multiple chains similar to how web applications consist of code across multiple clouds. The lack of interoperability is holding Web3 back, and Chainlink is the middleware offering the way forward. The first customers to move forward are likely to be banks, and Chainlink is a clear choice as long as the SWIFT partnership continues to expand.

Chainlink’s story today is much stronger than when we added this altcoin permanently to our portfolio a month after we launched the site. The market has been intense since then, from the Covid pandemic in 2020, to the exuberant 2021 high, to the 2022 bloodbath – yet, Chainlink remained a staple in the I/O Fund portfolio through all of this.

We expect Chainlink to remain a staple for the long-term, which is saying volumes since it’s an altcoin, not to mention that Chainlink has held the conviction ranking of other major winners. In the meantime, while we patiently wait for the fundamentals and product to align, we will provide you all of the technical analysis you need to manage this position as well as humanly possible. As always, we have our eye on the ball.

That’s a wrap for 2023! Thank you for the wonderful year. Our team has never performed better and we are in gratitude for the opportunity to learn and grow together as we move into 2024. Look for a 2024 Annual Webinar plus Q1 Earnings Kickoff Webinar in early to mid-January.

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My Firm called the Bitcoin’s Bottom; Here is Where the Price Goes Next

Posted on December 21, 2023June 30, 2026 by io-fund

Last November, FTX suddenly paused customer withdrawals. One of the world’s largest crypto exchanges soon filed for bankruptcy, revealing a scandal that led to $8.7 billion in missing funds. The FTX incident caused capitulation in crypto with Bitcoin seeing 77% drawdown.

With this backdrop, on December 9th, The I/O Fund and The Wealth Umbrella stated in the analysis: “Bitcoin is Going to Rally Again – Here’s What you Need to Know:”

“Though we are in the 4th bear cycle in Bitcoin's history, the prior 3 cycles suggest where we are in a rare buying opportunity. There is ample evidence to support the $15,500 level is either a major low or very close to a major low. Both the technical and on-chain analysis support this.”

We reiterated this in early February in a follow up analysis: Bitcoin is up 40% in 2023, Here’s Where it Goes NextBitcoin is up 40% in 2023, Here’s Where it Goes Next

“In conclusion, our multifaceted analysis into Bitcoin is supporting the likelihood of a larger trend reversal. This is not confirmed from our end until we see price make that last high in the coming weeks towards the $25,600 region. Interestingly, this new bull cycle is coinciding with a weakening US Dollar. Also, it is accompanied with more central banks being boxed into inescapable corners.”

And then to really drive the point home, we repeated in April: Bitcoin Vs Banks: Here's Where the Price Goes NextBitcoin Vs Banks: Here's Where the Price Goes Next

“What you can clearly see is a completed 5 wave pattern off of Bitcoin’s low. This is usually bullish. As long as $19,550 holds, any breakout above the current consolidation would be considered a buy from our analysis.”

“As long as The Wealth Umbrella’s signal stays in the “green environment” and price holds above $19,550, we will continue adding carefully to our Bitcoin position with real-time trade alerts sent to our research premium members.”research premium members.”

The chart below illustrates our impeccable timing:

The reason this is important is because our firm offers a rare, yet valuable roadmap for this volatile asset. Not only did we call the Bitcoin bottom, but we also called the previous Bitcoin top at the $58,000 range in the analysis Bitcoin Approaches Upside Target: “We have trimmed some in the $55,000 region, and may trim some more if we reach the $65,000. However, we see any large drawdown to be an opportunity for Bitcoin and we will likely enter again if/when this happens.”

Bitcoin is susceptible to a noisy, bifurcation between bulls and bears with extreme statements, such as: “Bitcoin will go to $1 million” or “Bitcoin is a ponzi scheme and will go to $0.” The truth is that Bitcoin has risen 7,000% in the past 10 years and smashed every record in equities in the past 15 years. Yet, it has also weathered multiple 70%+ drawdowns, but then against all odds, is capable of a full recovery within 3.5 years — every time. It bears mentioning that many dot-com companies have not reclaimed their all-time highs in over 20 years following such a selloff. Therefore, if you look at this rationally, it only makes sense to try and participate in this asset while limiting the downside. Most especially, if you can buy at the bottom, which is exactly what we set our readers up to do in 2023.

Our firm specializes in this precise discipline with all tech stocks – which is, participating in the upside while limiting the downside by using technical analysis for risk management. However, in the absence of fundamentals, this process excels at the ultimate high risk-high reward tech asset (crypto).

Our method combines price patterns with on-chain metrics which helped determine when crypto was approaching a meaningful top in early 2021. As a result, we cut our crypto holdings in half when Bitcoin was trading between $50,000 – $60,000, and then subsequently, our method helped determine when Bitcoin was bottoming at $15,500. By having a strong process for layering-in at the bottom and layering-out at the top, our firm has surpassed institutional tech portfolios every year since inception.

Below, is our updated analysis including what levels must hold for Bitcoin to be a buy.

Bitcoin is Setting Up for a New All-Time High

One year and 150%+ gains later, my firm would like to update you on where Bitcoin will go next. We do see a critical pullback on the horizon, yet the pullback is likely to be shallow for Bitcoin’s purposes. Most importantly, this next pullback has the potential to be the last great buying opportunity for Bitcoin, as the asset could be setting up for a new all-time high. My firm is prepared to buy this next dip and issues real-time trade alerts for every entry and exit.

Bitcoin’s Next Great Buying Opportunity

In the December 9th report just referenced, we showed a chart that outlined our long-term perspective while Bitcoin was around $17,000.

The above chart, at the time, showed Bitcoin was on major support with momentum shifting to the bulls. It also suggested that Bitcoin was only in a correction within a larger uptrend. Our targets for the coming bull cycle were between $75,000 – $132,000.

At the time, these targets seemed unlikely; however, the technical patterns supported them as long as critical support levels held on the way up. Today, Bitcoin is up 175% from our $17,000 buy rating, and the upper targets remain.

It is our belief that the current pullback will potentially be one of the last great buying opportunities before investors are forced to chase Bitcoin higher. The setup is there, but this depends on if Bitcoin can clear a few, key price levels.

If we zoom into the pattern that is developing off the November 2022 low, we can see the danger zones, as well as updated critical supports that must hold for this pattern to continue higher. Where I will grow cautious is if the next push higher stalls within the $50,000 – $58,750 region. If the 2023 bounce is only a corrective bounce in a much larger downtrend, this is the zone where this corrective bounce will reveal itself, and likely top.

In the above chart, the 1st major change of character was the opposite of what we saw in 2022. The uptrends consist of vertical moves higher, with overlapping and messy corrections that fail to make new lows. What is important to notice, in blue, is that we have successfully completed 2 series of five wave patterns. Each series pushed Bitcoin higher.

What follows a five wave push is always a three wave retrace. We are now starting the 2nd three wave retrace, which we believe will be targeting between $39,000 – $35,000. If this pullback resembles the prior one – overlapping and in an obvious three wave pattern – then, we believe this will be the last great buying opportunity before Bitcoin goes vertical. This will remain our gameplan as long as Bitcoin holds $28,000 in a deeper correction than expected. If we do break below $28,000, then the larger uptrend we are tracing to $100,000 will be invalidated. This is key as what’s central to risk management is always having a game plan if the primary count fails. For us, the $28,000 price level will act as an emergency brake with minimal downside for the mid-$30s. By having this emergency brake, we can participate in the upside while limiting the downside.

The next major hurdle for Bitcoin will be if/when we enter the $50,000 – $58,750 overhead resistance. The alternative red count on the chart suggests that the 2023 bull cycle is actually a corrective bounce in a very large bear market pattern. If we get into this zone and see the character of the trend reverse, then we will alter our risk management plan. If Bitcoin can clear the $58,750 resistance, then odds will greatly improve that we are on our way to the overhead targets listed over a year ago.

On-Chain Analysis

By Vincent Duchaine of The Wealth Umbrella

Even though there is not classic fundamental analysis within the crypto ecosphere, there are numerous data sets within Bitcoin’s blockchain, utility, and transaction activity that can act as a unique form of fundamental analysis. This is called on-chain analysis, and it is very effective in helping us understand when to increase and reduce risk within our crypto holdings.

For this type of analysis, we work with Vincent Duchaine of The Wealth Umbrella. His team of A.I. and Machine Learning engineers have devised a way to quantify risk using on-chain metrics, and the on-chain metrics are confirming the upper targets outlined by our technical analysis. Below is a glimpse into some of this on-chain analysis, which we use to better manage risk in the I/O Fund portfolio.

When Bitcoin hit $44,000, the on-chain metrics were suggesting a pullback was imminent. While BTC was reaching fresh 2023 highs, the number of newly created crypto addresses with a non-zero balance had been on a continuous downtrend for a few days. An easy way to think about this is that the demand for crypto was starting to fade while Bitcoin was making a new high. This is a divergence we usually see at a local or cyclical top.

As we were seeing this decrease in demand, it happened to coincide with the % of investors holding Bitcoin for over a year (hodlers) starting to take gains.

With hodlers looking to sell, and not many new buyers in the network, Bitcoin had no other choice than to pull back. But, despite this pullback, which we think will be short lived, our view is that Bitcoin still has more of upside.

None of our on-chain metrics have come close to a reading that indicates a historic top. A good example of this is our proprietary Kwiatkowski Indicator, which is a normalized aggregation of all the different market caps. It was designed to give a consistent spike at bottoms and tops. It called the bottom in November 2022 when it printed a value of -75. This indicator is currently only at 12, for an average value of 65 at the cyclical top. In fact, this value is actually consistent with a reading associated with the beginning of a new cyclical bull run. Indeed, except for the mini-bull run that happened in summer 2019, any other time this indicator went over 12 in the history of Bitcoin, it was the start of a new cyclical bull run.

This indicator is currently only at 12, for an average value of 65 at the cyclical top. In fact, this value is actually consistent with a reading associated with the beginning of a new cyclical bull run. Indeed, except for the mini-bull run that happened in summer 2019, any other time this indicator went over 12 in the history of Bitcoin, it was the start of a new cyclical bull run.

Same message can be found in the Market Value to Realized Value ratio (MVRV) that recently went to 2.11. The last time this indicator crossed this value out of a bear market was on October 26th, 2020. At that moment, Bitcoin was already at 65% of the total value it reached in the previous cyclical bull run. Strange coincidence, when we reached the same MVRV value last week, Bitcoin was also at 65% of its previous high.

Institutional Adoption: Bullish Fundamental Moment for Bitcoin

Bitcoin has no earnings reports, management overhauls, or supply chain disruptions – therefore, in order to measure what Bitcoin will do next, we must measure sentiment. This is why Bitcoin responds particularly well to technical analysis.

However, we can’t deny that Bitcoin is on the precipice of one of the most bullish fundamental moments in its history, which is widespread access for institutions and retail investors. In January of 2024, it’s expected that Bitcoin spot ETFs will be approved, which will allow ETFs to be backed by Bitcoin instead futures, and in turn, this will allow institutions to hold an allocation to Bitcoin in a manner that is secure and can be liquidated similar to a stock.

To attempt to size the demand the ETFs may create, Grayscale has $18 billion assets under management. If we assume 10 Bitcoin ETFs are approved of similar popularity, this could add an additional $180 billion in demand for a limited supply of Bitcoin. As a reminder, Bitcoin is limited to 21 million Bitcoins and the next halving occurs in 2024. Halving can lead to a higher value for Bitcoin as it reduces the number of new bitcoins being generated by the network.

In anticipation of ETFs being approved, central banks have released guidelines that allow banks to hold up to 2% of reserves in crypto. The assets of central banks total roughly $44 trillion, and so this would be roughly $800 billion, or equal to Bitcoin’s market cap, if fully utilized.

Conclusion:

Last week, our firm was on Fox Business News where Charles Payne asked Lead Tech Analyst Beth Kindig for a price target. Using the analysis above she stated on live TV that our price target is $100,000 – minimum. This target is backed by both technical and on-chain analysis; the same analysis that has helped us navigate meaningful turns in Bitcoin since 2019.

Of course, investing is never as easy as laying out a price target and holding on. In this report, you got a glimpse into our active process that has been quite rewarding within the crypto space. Further, we laid out what steps Bitcoin must take in order to reach our long-term price target as well as the price at which we pivot to protect our gains. We reserve our entries and exits for premium members. If you’d to know when we are buying or selling Bitcoin with real-time trade alerts, then please consider subscribing below.

Disclaimer: This is not financial advice. Please consult with your financial advisor in regards to any stocks you buy.

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Bitcoin: Setting Up for a Strong 2024

Posted on December 21, 2023June 30, 2026 by io-fund

Welcome to the recent new Essential Members. We have revamped the Essentials Portfolio by including Bitcoin. Stay tuned for trade alerts sent directly to your inbox, keeping you up-to-date with any adjustments to three key holdings. We are adding Bitcoin because we believe it will be advantageous for our Essentials members to receive real-time trade alerts for one of our top convictions in the upcoming year. What we emphasize is that it’s not a stock tip that generates wealth, rather how you manage the position. One of our most valuable value-adds has been our Bitcoin trades, which you can read about here. By initiating Bitcoin for Essentials Members, we will be updating you in real-time on our Bitcoin trades via email alerts.

The harsh truth is that many stocks look to be topping in their charts given the strong rally in tech this year, yet Bitcoin looks as if the chart has room – perhaps substantial room, which we will monitor and update you with real-time trade alerts as we hit key price levels.

Certainly, the asset is facing one of the best moments for institutional adoption, which is the approval of spot Bitcoin ETFs and a clearance for central banks to own up to 2% of assets in crypto. Couple this ramp in demand with the Bitcoin halving that is set to take place in 2024, which will further restrict supply, and we think this is the perfect recipe for Bitcoin to lead in 2024.

Bitcoin Backdrop:

It’s important to understand that some of the brightest minds in technology (and by far, the best investors in technology) believe bitcoin is a viable form of currency, as well as one of the recent marvels within tech innovations. Venture capital firms such as Khosla Ventures, Union Square Ventures, Lightspeed, and A16Z have been funding bitcoin projects for some time (circa 2013 and 2014).

On the other hand, one of Bitcoin’s hurdles is multigenerational adoption. To date, bitcoin is predominantly a retail dominated asset. Late Charlie Munger and Warren Buffett both criticized bitcoin as worthless. In fact, Buffett went so far as to claim Bitcoin is “probably rat poison squared.” In this article, we would like to highlight the unique benefits of Bitcoin.

Economic Uncertainty in Lower GDP Countries

The populations that rapidly adopt Bitcoin are located in lower GDP countries. Imagine not having enough confidence in your government and federal-backed insurance to put your money in the bank. Yet, this is the reality for billions of people globally who do not trust their governments – primarily in Latin America, Africa, Asia and the Middle East. There are ongoing conflicts in these countries, civil dis-rest, cartels often run the government behind the scenes, and the domestic economies can become crippled overnight.

Regardless of how you feel about your own country’s government and banking system, it’s important to acknowledge that the best technology solves issues for global populations. You do not need to personally use Facebook to acknowledge the social network is popular globally with 3 billion users. You do not need to personally use Salesforce to see it solved a real need for sales and marketing teams. Similarly, you may feel quite confident in your country’s government and banking system – but it’s important to acknowledge that the majority of the world does not have this confidence and these populations do not use a bank. We call this the “unbanked” and this is a key demographic driving Bitcoin adoption from the bottom up.

For example, Venezuela saw record Bitcoin adoption during a period of hyperinflation when the price of a cup of coffee rose to 2,800 bolivars up from 0.75 bolivars within one year, representing an increase of 373,233%, according to Bloomberg data. Essential goods such as toilet paper and medicine were also very costly, and many Venezuelans fled the country. Despite market volatility, bitcoin helped Venezuelans make money at a time when inflation threatened their livelihood and also their family’s survival. Cryptocurrency offered the lower GDP country accessible protection and the ability to escape an autocratic government.

Notably, the government in El Salvador has adopted Bitcoin as their national currency. During the transition, the government provided $30 in free Bitcoin for citizens who signed up for a digital wallet. Within weeks, the number of digital wallets in El Salvador surpassed the number of bank accounts in the country. This is clearly demonstrating the distrust many global populations have with their banking system. Although many consider countries with the most dominant GDPs as the countries who set the world’s stage for economic conditions, the emerging markets play an important role as the unrest in these regions can lead to disruption.

Apple, Google, Microsoft, and Amazon crossed market caps of $1 trillion because their products scale to global populations and are required on a daily basis. Bitcoin not only scales to the global population, but it also protects and diversifies their livelihood – a necessity rather than a convenience. In fact, we see populations who are not necessarily tech-savvy most enthusiastic about bitcoin, and this was part of the I/O Fund’s thesis in 2019 as to why Bitcoin would cross a $1 trillion market cap.

Notably, Bitcoin is also the world’s most secure financial network. The transfers eliminate processing fees and hedges against inflation. Due to these unique features, the I/O Fund believes Bitcoin should be worth as much as a search engine, enterprise software, social media network, warehouse fulfilment/data center (AMZN), or iPhone hardware company. Bitcoin is more secure than 10,000 banks combined due to its decentralization. This level of security solves a genuine need for the financial system as the financial system cannot be automated without a decentralized blockchain solution.

The United States Has Its Fair Share of Financial Issues Too

Economists have discussed the effects of going off the gold standard during Nixon’s presidency, yet this has been a futile conversation in the past as there has been no alternate method of transacting other than centralized cash. Gold and precious metals are hard to transport and cannot be used to transact daily in the modern age, despite having a store of value.

During the Nixon Presidency, the United States fiat system decoupled from gold, and this is why the cost of living has gone up exponentially while wages have stagnated. This has forced many households to work two jobs with little to show for their efforts.

Currently, the United States is at debt levels of about 119 percent of gross domestic product (GDP) whereas the average since 1940 has been in the 70 percent range with the exception of World War 2 when debt-to-GDP was at 106 percent. There has been a steady rise in the level of national debt to GDP due to decreased tax revenue and increased spending, especially on health care. The debt load is being passed onto Millennials, which is a demographic rapidly adopting cryptocurrency.

Source: YCharts

The United States is unlikely to see hyperinflation to the extent of Venezuela (at least, let’s hope not). However, trust in fiat currencies is eroding as debt continues to climb.

Japan is an excellent case study for an economy that is struggling due to quantitative easing. The Japanese debt-to-GDP ratio topped 260% last year due to its quantitative easing. Government debt to GDP in Japan averaged 137.4% from 1980 to 2017. Easy money policies from Japan’s central bank harmed domestic asset returns by suppressing local interest rates. Ranking as the world’s third largest economy, Japan resorted to negative interest rates in 2016. In April 2016, it was reported that a “Japanese bank buying 5-Year U.S. Treasuries with perfectly hedged currency and duration risk would (lose) 0.9% a year.”

Consequently, Japan is a thriving bitcoin market and has seen a continuation of crypto activity despite regulations. For example, 39% of investors aged between 18 and 30 years have invested more than ¥10,000 in cryptos. Also, 49% of young crypto investors between 18 and 30 years trade cryptos multiple times weekly.

During the Ukraine-Russian war, the use of crypto once again took prominence as the Ukrainian government accepted crypto donations during this crisis. According to Alex Bornyakov, Deputy Minister of Ukraine’s Ministry of Digital Transformation, “In times like these, response time is crucial. Crypto is playing a role to give us flexibility to respond really quickly to deliver the army’s required supplies.”

The lack of financial access might also increase the use of crypto in both countries. The Ukraine central bank had suspended electronic transfers and reduced cash withdrawals with Ukrainians turning to cryptocurrency.

In the words of Alex Gladstein, Chief Strategy Officer at the Human Rights Foundation, “The fact that it can’t be frozen, the fact that it can’t be censored, and the fact that it can be used without ID is very, very important,” He further added, “And they are why bitcoin is such an important humanitarian tool.”

Institutional Adoption

Most people can imagine a world that runs on digital financial transactions as money today is exchanged digitally and cashless. The United States has digital financial apps, such as Apple Wallet, and Venmo is a popular method to exchange money between friends without fees.

One of the biggest hurdles for institutions, however, is not the idea of a world run on digital currencies, but rather the decentralization concept and the need for reliable and safe cryptocurrency custodians. Institutional investors need to know the assets are secure, insured, and under the care of a trusted third party, per SEC rules, which requires advisers to keep client funds with a qualified custodian. ETFs solve these major hurdles.

Custody solutions safeguard cryptocurrency, and go beyond private keys or wallets, which are subject to hacks or the misplacement of hard disk storage. The word “custody” refers to a third-party provider of storage and security services for cryptocurrencies. These services are aimed at institutions and hedge funds, and incorporate a combination of storage online for liquidity and storage that is disconnected from the internet.

According to Fidelity’s Institutional Investor Digital Assets 2022 Study, 58% of the surveyed Institutional Investors had an investment in digital assets, up 6 percentage points from 2021. 74% of the total surveyed investors had plans to buy digital assets in the future compared to 71% in 2021. 81% of the surveyed investors believe digital assets should be part of the portfolio. Asian Investors had about 69% invested in digital assets, though a 2-point decrease from 2021. While European Institutional Investors showed an 11% YoY jump to 67% of the investors surveyed, US Investors showed a 9-percentage point increase from 2021 to 42%.

How I/O Fund traded Bitcoin in the past – What You Can Expect

Here is an example of how the I/O Fund has traded Bitcoin in the past. The goal is to be directionally correct.

Similar to this, you will receive notifications via email when we buy and sell Bitcoin moving forward. We often cover a stock in our free newsletter, but this is a small percentage of the work involved with smart investing. Our real-time trade alerts are invaluable for knowing how much of a position we own, and when we are buying or selling.

Bitcoin Buy Plan

We use a blended approach of technical analysis to determine our portfolio entries and also to pre-determine our risk management. Risk management is a key part of owning tech stocks. In the below video our Portfolio Manager Knox Ridley outlines his bullish outlook on Bitcoin, citing on-chain and technical data to support his prediction of an upward trend.

Currently, we have an 8% allocation in Bitcoin. He anticipates the next buying opportunity to arise within the $38,000 to $40,000 range and advocates for making proactive moves in the cryptocurrency market. Additionally, he maintains that there are no plans to sell Bitcoin prematurely. The only levels to closely monitor are the breakdown below $28,000 or the range depicted in the video above $50,500, if a five-wave drop is followed by a three-wave retrace. Short of those two things happening, the I/O Fund will not be selling Bitcoin right now – rather we are looking to be heavy buyers.

You can read more here, and please whitelist us to ensure you are receiving the trade alerts when they occur, which will be sent via email.

Royston Roche, Equity Analyst at the I/O Fund, contributed to this article.

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