Bitcoin After the Cycle Peak: What Comes Next and How We’re Positioning

Bitcoin rarely rewards narrative-based investors for long. Time and again, it has shown a habit of reversing its dominant trend against the prevailing story of the moment. A large portion of the I/O Fund’s edge has been staying on the right side of Bitcoin’s big turns in both directions by following a process rooted in analyzing sentiment through technical analysis, rather than headlines. 

Since December 2022, when Bitcoin was trading around $16,000, we went against the crowd at the time and called for the start of a new bull cycle. In the months that followed, we published seven additional pieces reaffirming Bitcoin as a buy, and we issued 13 buy alerts to premium members at key points from roughly $25,000 up through $60,000. 

Then, at the height of Bitcoin’s narrative hype, in October 2024, we did something we’ve learned is essential in crypto: we shifted from enthusiasm to discipline when risk was rising and narratives turned euphoric. In our article, Bitcoin Bull Market Intact As Risk Increases, we wrote:  

“We do believe risk has increased. As a result, we will likely reduce some risk on the next rally to all-time highs.”  

It was a classic period of exuberance—when pundits were confidently calling for $200,000+ in short order, yet the risk/reward was already deteriorating beneath the surface. 

From there, we followed up with three additional articles and a free webinar explaining why Bitcoin’s risk was far higher than the mainstream narrative suggested. We backed that view with nine sell alerts, reducing most of our Bitcoin exposure between $95,000 and $113,000—once again stepping aside as conditions began to deteriorate.

Now, with a new bear cycle likely underway, sentiment is back in the driver’s seat. As the larger trend resolves, new narratives are emerging—most of them designed to pull investors in at precisely the wrong time. 

In this report, I’ll outline where crowd psychology is most likely to push Bitcoin in the coming months. I'll also examine Coinbase—given its strong correlation with Bitcoin—to help confirm the path. While we still believe another generational buying opportunity will emerge, we believe Bitcoin will need to move higher first.

Bitcoin’s Narrative Trap: A Better Way to Navigate Volatility 

Investing in Bitcoin based on narratives has historically been a poor strategy. While the logic can feel compelling, Bitcoin has repeatedly shown an uncanny ability to move in the opposite direction of what the prevailing narrative would suggest.  

Showing large rallies followed by steep corrections, each aligned with major regulatory, technological, or institutional news. Key milestones—such as futures approval, corporate adoption, national adoption, fraud-driven collapses, and ETF approval—serve as markers showing how macro‑narratives and sentiment shifts impact Bitcoin’s volatile price trajectory.  

Thematic investing certainly has its benefits, and the I/O Fund uses it as one component within a blended approach. However, when relied on in isolation, it can create misplaced confidence and prove detrimental—especially in crypto. 

Instead, we’ve found that applying technical analysis to crypto positions, particularly when evaluating sentiment-driven patterns, has been a more effective way to participate in Bitcoin’s meteoric upside while helping to manage its inevitable volatility. 

Decoding Bitcoin’s Price Moves Through Technical Analysis 

If narratives don’t consistently explain Bitcoin’s price swings, many conclude that Bitcoin’s moves are simply random. 

Viewed through the lens of technical analysis, it becomes clear that this isn’t true at all. What most often drives Bitcoin’s price action is sentiment, exactly what technical analysis is designed to measure. Sentiment is simply herd behavior, and herd behavior tends to repeat in recognizable patterns. 

In the current setup, Bitcoin has been tracing a large degree, 5-wave pattern off the 2022 low, one that now appears likely complete.

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Within a 5-wave structure, the third wave is typically the most powerful phase of the trend. It’s the moment the market collectively “gets it” all at once - shorts rush to cover while sidelined participants panic-buy into longs. The result is often a sharp, near-vertical price advance that coincides with peak expansion in volume and momentum. 

By contrast, the fifth wave is driven by late arrivals—those who missed the earlier move and assume the trend is only just beginning. It is often the riskiest segment of the advance and, in our view, should only be approached with a defined exit plan. In this phase, price may still push to a higher high, but it frequently does so on declining volume and weakening momentum. 

As shown below, this is precisely the behavior Bitcoin’s price trend displayed. 

Bitcoin (BTC/USD) chart displaying Bitcoin’s price action from early 2023 through early 2026 on a 3‑day timeframe, annotated with a five‑wave Elliott Wave structure. The price rises through waves (1), (2), (3), (4), and (5), culminating in a major peak in mid‑2025 before declining into 2026. A large “Vertical Price Swing” label marks the strong upward acceleration during wave (3).  

As price went vertical in 2024, both momentum and volume accelerated and ultimately peaked for the cycle - classic third-wave behavior. Price then continued to grind higher, but volume and momentum began to decelerate, a key signal that the advance had likely entered its final fifth wave. 

These were not the only warning signs. Bitcoin’s internals shifted into a less constructive posture well before the top. Note how volume expanded alongside price from the 2022 low into the late-2024 high. During that stretch, rallies were generally confirmed by rising volume. RSI also tended to find support near the 33.5 level on pullbacks, often referred to as the bull-market support zone. 

Bitcoin (BTC/USD) price chart (2023–2026) showing a completed five‑wave Elliott Wave cycle and a current A‑B‑C correction into support zones. Fibonacci retracement levels at 38.2%, 50%, and 61.8% mark potential downside targets. Volume is declining and RSI momentum shows lower highs and bearish signals. 

Since the last advance into 2025, volume decelerated as price increased and then expanded as price declined. Buyers appeared to fade and sellers became more aggressive, shifting supply/demand dynamics. This was reinforced by a break in RSI support and an inability to regain the prior trend line. These are the types of signals we often see early in trend transitions and do not bode well for Bitcoin.  

Now that Bitcoin is 48% lower from our last free article called, Is Bitcoin Nearing a Top? What the Herd Missed at $16,000 and Is Missing Now, investors are understandably asking what comes next.  

Using the same technical analysis framework to map potential paths, it appears we may be approaching a tradable low ahead of a sizable bounce. 

Bitcoin (BTC/USD) 4‑hour chart showing an A‑B‑C correction with price in the C‑wave inside a support zone. Potential (B) rebound targets are marked above with green arrows, while a deeper (C) downside box sits lower on the chart. Elliott Wave labels, support/resistance zones, and momentum indicators are displayed.

My base case is that Bitcoin is setting up for a large bounce to the $84,000 - $107,000 region. However, we may need one more minor swing into the $50,000 region first. This would be the final 5th wave in the decline, so should unfold with less volume and less momentum than the last drop. Alternatively, if Bitcoin breaks back above $72,500, I would treat that as evidence a low is already in place, as we bounce toward the $84,000–$107,000 range. 

Whether the larger bounce has already begun or requires one more marginal low first, the most likely outcome is still a bear-market rally that tops out below $107,000. The structure of the advance will be the key signal. If the move higher is choppy, overlapping, and corrective, it would reinforce the bear-market thesis and increase the odds of a final decline toward the $40,000–$30,000 range in the months ahead. 

If, however, Bitcoin breaks above $107,000 in a more vertical, impulsive move, we will re-evaluate the probability of new highs. Until that happens, the odds still favor the view that this bear cycle is not yet halfway complete. 

Conclusion: 

In conclusion, narratives often push Bitcoin investors into the wrong trade at the wrong time. We warned readers last year that this was Bitcoin’s recurring pattern, and it played out as expected. Technical analysis, particularly when used to map sentiment-driven patterns, remains a more effective tool for managing risk in Bitcoin. 

While we believe Bitcoin is finishing the first leg of a multi-month bear cycle, it is likely closer to a meaningful bounce than most realize. Even if price dips into the $50,000s in a final push lower, we would still expect bulls to attempt a move back toward the $90,000 area. Until proven otherwise, however, we will treat any advance as a bear-market rally, with downside risk ultimately extending toward $40,000–$30,000 before this cycle completes. At that point, there will likely be a new narrative explaining why Bitcoin can only go lower.

If you are a crypto investor who saw gains turn into losses in the most recent drop, or are looking to become a crypto investor at a favorable price, we encourage you to attend our weekly premium webinar that we hold every Thursday at 4 pm EST. Next week, we will not only outline the warnings that we are seeing the equity market, and how we plan to navigate this, but we will outline our long-term plan for Bitcoin.  Sign Up Here

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.

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