In late 2022, Bitcoin dropped into the $16,000 range in the wake of the FTX scandal. At the time, the landscape was void of credible institutional buy calls. Instead, most of Wall Street stood on the sidelines or echoed consensus risk-off narratives.  

Now, as Bitcoin trades more than 600% above its 2022 bottom, a tidal wave of institutional optimism has arrived with many analysts and money managers calling for a doubling in price before year-end. These predictions, while headline-grabbing, arrived only after Bitcoin had already made the bulk of its move in late 2024. 

Sentiment is a powerful force in the markets. Historically, the most optimistic bullish narratives tend to emerge when prices are extended, while more cautious narratives often appear near market lows. 

Meanwhile, the I/O Fund has consistently set ourselves apart with early, accurate Bitcoin coverage starting in 2019. While others chased the 2021 hype with $200,000 or $500,000 price targets, we took a disciplined approach—cutting crypto exposure by half to lock in gains. More recently, when Bitcoin dropped to the $16,000 region, we issued a Strong Buy Alert to our free subscribers, which was featured on Tier 1 media.  

These calls were rooted in a systematic approach to analyzing and investing in Bitcoin through the lens of technical analysis, on-chain analysis, and monitoring global liquidity trends. 

Now, the system that helped us identify the $16,000 bottom in Bitcoin is telling a more complex story. Global liquidity appears to be stalling and setting up for a reversal. This is historically not good for Bitcoin and tends to coincide with major tops. This inflection point lines up with our Technical Analysis that has us in the final leg of the multi-year bull market.  

However, the size of this final leg is what is in question. While we believe a modest move higher has the most probable scenario, On-Chain Analysis supports a large push higher that could exceed the $200,000 region before hitting a cyclical top. For this reason, we explain our game plan in this report to protect our well-earned gains while remaining positioned for the bulk of the next move higher, no matter where the final target is. 

On-Chain Analysis – The Case for Bitcoin $200,000 

We’ve consistently relied on WealthUmbrella’s top-tier On-Chain Analysis throughout this cycle. Their model flashed a buy alert in December 2022, around the same time our own system showed a major opportunity in Bitcoin. Since then, they’ve remained as bullish as we have been. The below section was contributed by WealthUmbrella, and they see higher levels before a cyclical top is likely in for Bitcoin.  

Volatility Is Low 

One of the most meaningful signals today is realized volatility, which simply measures how much Bitcoin’s price has actually moved (up or down) over a recent period. Right now, that volatility is close to a historic low.

Chart created by WealthUmbrella, shows that the current level of realized volatility resembles major lows, not what we see around major tops. 

Historically, major tops in Bitcoin—both short-term and long-term—have happened when volatility was rising or already high. So, this current period of low volatility is not something we usually see at the end of a bull run. In fact, it looks more like what we saw at the bottom in late 2022, just before Bitcoin began its massive recovery.

As Bitcoin becomes more mature—especially now that large institutions are involved—some decline in volatility is to be expected. But a full market top forming while volatility is still at record lows would be something unprecedented. 

The Supply Side Remains Strong 

There’s also strength under the surface. During the recent rally, long-term Bitcoin holders (those who held through prior cycles) were gradually selling. But that selling pressure has cooled off. 

Chart created by WealthUmbrella shows the demand for Bitcoin remains healthy in August of 2025. 

Meanwhile, new Bitcoin wallets with a balance of zero – i.e., new investors to Bitcoin —are increasing. This means retail demand is growing steadily. That trend has actually picked up pace in recent weeks, which is a healthy sign. 

The Dip Could Be Setting the Stage for the Next Move Up 

This doesn’t mean Bitcoin won’t dip a bit lower short term. Its recent price action has been closely tied to movements in the stock market, especially because ETF inflows are driving a lot of the demand. The good news is that this small pullback has already helped cool off some of the overbought conditions that had built up, which should set the stage for another leg higher.  

One of our key models, the Metcalfe Law Discount/Premium (MLDP) Z-Score, confirms this. This model is based on the idea that Bitcoin’s value comes from the size and activity of its network (similar to how Metcalfe’s Law values a communications network). The Z-Score shows how “hot” or “cold” the market is relative to its historical patterns. 

Chart created by WealthUmbrella shows the Metcalfe Law Discount/Premium (MLDP) Z-Score has ample room to run before hitting a level associated with a meaningful top. 

Right now, the Z-Score is down to 0.91. For context, that’s one standard deviation lower than where it was when Bitcoin first crossed $112.9K on July 10. That kind of cooling historically creates room for further upside. 

However, our indicators suggest that the next push higher will not be the last or will be a rather large push higher. Our confidence is grounded in a group of in-house models we call Market Top indicators. These models are designed to signal when the market is getting truly euphoric—and they’ve done a good job across different Bitcoin cycles. 

Chart created by WealthUmbrella shows that their 3 primary top indicators, which track different elements of Bitcoin’s ecosystem, are in alignment that Bitcoin is not in threat of topping out, yet. 

What’s imperative to understand is that these models each look at different parts of the ecosystem—network activity, profit-taking behavior, capital flows. So the chance that all of them would miss the mark at the same time is very low. And if that ever did happen, it would likely mean Bitcoin’s fundamentals have changed in a way that’s never happened before. 

To further back this claim, we have run intensive simulations to estimate where Bitcoin’s cyclical top could land. That means: what price would Bitcoin need to reach for all our major models to flash “this is the top”? Using various models, tell us what price would trigger them to signal a top. 

The result of this simulation including price targets for a Bitcoin cycle top are discussed in the last section of this report…. 

How Global Liquidity May Derail the Move to $200,000 

Liquidity is one of the most overused—and least understood—terms in financial markets. It refers to the availability of capital in the system—specifically, how easily businesses, consumers, and financial institutions can access cash or credit. 

In today's global economy, liquidity is inseparable from debt dynamics. It is not the creation of new debt that dominates capital flows, but the ability to roll over existing obligations. In fact, three out of every four global financial transactions are related to debt refinancing, not expansion. Moreover, nearly 80% of global lending now requires collateral, typically in the form of high-quality, low-volatility assets like U.S. Treasuries. 

This creates a framework where liquidity—and by extension, risk appetite—is dictated by how cheaply and easily borrowers can refinance without overcollateralizing. The more capital that’s freed up through this process, the more capital can rotate into risk-on assets such as Bitcoin. 

A number of variables influence liquidity conditions: 

• Central bank policy 
• Fiscal spending 
• The Treasury General Account (TGA) 
• Federal Reserve repo operations 
• Broad equity market performance 
• Bond market volatility 

Collectively, these forces determine whether capital and confidence flow into the system or are pulled out. However, among all these variables, the most powerful and persistent driver of global liquidity is the U.S. Dollar. 

Roughly 64% of global debt is denominated in USD—which means foreign borrowers who accessed cheap U.S. capital must continue sourcing dollars to service that debt. When the dollar weakens relative to their local currencies, less local currency is needed to meet dollar obligations. This frees up capital that can chase higher-yielding risk assets, including Bitcoin. 

This inverse relationship between the U.S. Dollar Index (DXY) and Bitcoin has been both consistent and predictive across cycles: 

Bitcoin tops have an inverse relationship to the strength of the U.S. Dollar.   

In the above chart, three dynamics are evident: 

• Every major Bitcoin bull market occurred during a declining dollar. 
• Every significant Bitcoin bear market coincided with a rising dollar. 
• The steepness of the dollar’s trend often defines the magnitude of Bitcoin’s move in the opposite direction. 

We are now approaching a critical inflection point. The Dollar Index has been in a clear downtrend since peaking in late September 2022—just weeks before Bitcoin bottomed. The most recent leg of this decline in the dollar shows a completed five-wave structure, typically the final phase of a correction before a reversal. Momentum is starting to shift upward, and a sustained move above 101 on the DXY would confirm a major low and the onset of a new dollar uptrend.

As of August 2025, the U.S. Dollar Index (DXY) appears to be forming a significant bottom and initiating a new uptrend. A strengthening dollar typically signals a contraction in global liquidity, which could pose headwinds for the ongoing Bitcoin bull market and other risk assets. 

The implications are profound. A rising dollar increases the cost of servicing USD-denominated debt for foreign borrowers, draining liquidity from the system and reducing available capital for speculative assets like Bitcoin. In other words, a stronger dollar means tighter global liquidity, and risk assets must adjust accordingly. 

However, until DXY can break above $101, it can still make another low, which will further support higher prices in Bitcoin. The takeaway here is to note that the U.S. dollar is closer to a major low than most think. While it can extend further, once we get evidence of a trend reversal, this should line up with a topping process in Bitcoin. Until then, we can and should see Bitcoin continue on an upward trajectory

Using Technical Analysis to Organize the Current Risk in Bitcoin 

On-Chain Analysis supports an eventual move to ~$200,000 in Bitcoin before seeing a cyclical top. However, we are seeing the U.S. Dollar close to putting in a major low and threatening to drain global liquidity in the coming uptrend.  

When we see potentially conflicting data points between liquidity dynamics and On-Chain Analysis, we tend to lean into Technical Analysis to define the risk parameters in our portfolio. The below section outlines the two most likely paths Bitcoin will take, including the game plan we intend to follow to protect our gains and not miss any of the remaining uptrend….

Is Bitcoin a Buy Right Now? Join Us for a Free 1-Hour Webinar on Bitcoin from a leading team in crypto 

Risk managing Bitcoin and other cryptocurrencies has helped the I/O Fund to become a high performing tech portfolio. If we were a hedge fund, we’d rank #2. If we were an ETF, we’d rank #5. 

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• Our outline for the critical levels that must hold including at what price levels Bitcoin will top in the near-term and what levels Bitcoin will ultimately top in this cycle 
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