Institutional Capital and Crazy Bitcoin

Source: Talking Outside the Lines

In the past few days, Bitcoin has continued to break new highs, reaching a peak of $123,000. According to the previous plan, I sold 10% of my position yesterday (July 14). Regarding our dollar-cost averaging plan during this cycle, previous articles have shared specific details:

In 2022, we established a 20-month BTC dollar-cost averaging plan, committing to buy BTC monthly, which will conclude in January 2024 (completion of this round of the plan). The average purchase cost of the newly acquired Bitcoin is around $25,000. At the same time, based on our expectations and targets for this bull market (expecting BTC to reach $100,000 to $120,000, with a goal of achieving 3 to 5 times returns on the overall position), we also customized two selling plans, namely Plan A and Plan B (we later executed Plan A).

As of now, I have executed three selling operations as planned, on December 5, 2024, May 22, 2025, and yesterday (July 14, 2025). According to the original target plan, I have basically completed the established plan. However, if BTC continues to rise in the next six months, I will consider selling an additional 20% of my position, while at least 50% of my Bitcoin will remain in cold storage as a long-term asset.

Of course, the above is just my personal position review. Although it is a simple summary, looking back, it seems to represent a kind of stubbornness or persistence over the past few years.

1. The Bull Market is a Great Retreat

Some say that the bull market is a great retreat, and this statement is quite reasonable.

As this bull market continues to see BTC break new highs, reaching over $120,000, if historical cyclical patterns still hold, it is possible that Bitcoin may enter a "consolidation or phase bear market" next. Of course, I am mainly referring to a phase; in the long term, I have always been a die-hard bull on Bitcoin.

Since U.S. President Trump officially signed the One Big Beautiful Bill on July 3, Bitcoin has risen by more than $15,000, especially in the last few days, where it has almost created new historical highs every day. This feeling seems similar to what we experienced last year (2024), if I remember correctly, around March and November.

Some may say: this time feels different. Others might say: the historical cyclical patterns of the crypto market have been broken.

But rationality can still tell us that Bitcoin's recent performance is worth our vigilance, at least we need to be seriously cautious about potential risks in the coming weeks (for example, within the next 5 to 6 weeks).

Here, we might as well expand our thinking through the DXY (Dollar Index) indicator:

Generally speaking, the performance of risk assets tends to be inversely proportional to the DXY. That is, in most cases, if the dollar weakens, high-risk assets (such as gold and Bitcoin) perform strongly, and vice versa. Although we have always been optimistic about Bitcoin, we must also acknowledge that gold remains the preferred choice for risk-averse funds, not Bitcoin.

Let's first look at the comparison between gold and DXY, as shown in the figure below.

Looking only at the larger trend, we can see from the above chart that since the beginning of the year, as DXY has generally declined, the price of gold has continued to rise, consistently increasing until around April, and then entering a large-scale consolidation phase.

As gold consolidates at high levels, if DXY continues to decline or hovers in a low range, then with some changes in macro policies, it is possible that some funds may choose to enter Bitcoin for risk hedging.

Continuing to compare Bitcoin & DXY indicators, we can also find some clues, as shown in the figure below.

From the above chart, we can see that since the beginning of this year, there are two notable divergence points between BTC and DXY. The first occurred in April, after Trump announced a 90-day suspension of tariffs, and the second is the period since the passage of the One Big Beautiful Bill this month (July).

To put it more simply, due to changes in macro and other factors, Bitcoin's performance seems to decouple from the dollar index at certain stages, and during each period of decoupling, Bitcoin continues to create higher historical prices. For example, after the decoupling in early April, Bitcoin subsequently created a historical high of $110,000; after the decoupling in early July, Bitcoin has now created a historical high of $120,000 (it is also possible that it will continue to attempt to break new highs in the next two weeks).

So, is there a possible scenario where, assuming the existing macro conditions remain largely unchanged, after Bitcoin continues to create new highs, it will enter a new round of correction, such as falling back to around $100,000 in August (i.e., within the 5 to 6 weeks we mentioned above)?

August now appears to be a relatively interesting time point. Here, let's make a new assumption: if Bitcoin does indeed experience a correction and a new policy impact event occurs (such as changes in the Federal Reserve's interest rates in September), and BTC and DXY decouple for the third time this year, then theoretically, it is also possible that Bitcoin will continue to rise and (around October) break through historical highs again.

However, if this new assumption can indeed happen, then theoretically it may also mean that without seeing more significant macro impact events this year, the new highs in the fourth quarter are likely to be the final peak of this bull market, after which we may truly welcome a relatively long phase of "bear market."

Of course, all of the above is merely our speculation and conjecture based on some data perspectives and theoretical levels. As for how Bitcoin will specifically move next, whether it will enter a new phase of "consolidation or phase bear market," or completely break the historical cyclical patterns and enter a super "long bull cycle," we will leave it to time.

2. Institutional Capital and Crazy Bitcoin

In previous articles, we have also discussed that the price of Bitcoin in this bull market seems to be mainly driven by institutions, with more and more institutional capital directly or indirectly chasing this wave of Bitcoin's rise.

For example, after the BTC ETF was approved, BlackRock's IBIT (iShares Bitcoin Trust) reached a record $83.5 billion in assets under management in just over a year, accumulating over 200,000 BTC in assets. As shown in the figure below.

In contrast, the world's largest gold ETF, GLD (SPDR Gold Shares), took 20 years to reach the same milestone.

Earlier, the crypto market was mainly dominated by retail investors. Since the last cycle, retail investors have begun to realize that more and more traditional institutions (like Tesla) are entering the market. In this cycle, more institutional capital, hedge funds, and family offices have started to research or participate in the cryptocurrency field, even those "conservative" funds seem to be considering allocating 1% of their assets to Bitcoin.

According to a report by KobeissiLetter, the current assets under management (AUM) of U.S. institutions is about $31 trillion. If 1% of U.S. institutional capital flows into Bitcoin, it could potentially drive an additional $300 billion into this asset. Considering the global institutional AUM, we may see over $1 trillion flowing into Bitcoin in the future. As shown in the figure below.

I asked ChatGPT to calculate, and if $1 trillion continues to flow into Bitcoin, then the future price of Bitcoin could rise from the current $120,000 to $250,000 to $340,000 (not including speculative funds accelerating their entry).

This figure also seems to align with our previous expectations (speculations) in earlier articles, namely: Bitcoin could reach $300,000 by 2029.

In summary, we reiterate an old saying from previous articles: If your goal is long-term and you firmly believe in Bitcoin's future, then it doesn't matter when you buy (accumulate) Bitcoin. However, if your goal is short to medium-term, then you need to remain vigilant about market fluctuations and make choices that suit your risk preferences.

Additionally, as we mentioned above, Bitcoin may begin to enter a new "consolidation or phase bear market," but this may not be a bad thing for altcoins. As we pointed out in our previous article (July 12) on the topic of altcoin season: with Bitcoin's continued new highs and entry into consolidation, this may bring about a new round of "mini altcoin season" opportunities.

That's all for today. The images/data referenced in the main text have been added to the Talking Outside the Lines Notion. The above content is merely personal opinions and analyses, intended for learning records and communication purposes, and does not constitute any investment advice.