Fidelity Digital Assets has adjusted its medium-term outlook for Bitcoin from “positive” to “neutral” following the first quarter, citing various metrics indicating a shift away from Bitcoin being considered “cheap.”
In its latest Signals report released on April 22, Fidelity Digital Assets referenced the Bitcoin Yardstick, or Hashrate Yardstick, which assesses whether Bitcoin is undervalued. The yardstick remained between a negative one and zero deviations from the mean of 51% in the first quarter, suggesting no days in Q1 where Bitcoin was considered “cheap.” Consequently, Fidelity views Bitcoin as now trading at “fair value,” leading to a revised medium-term outlook to neutral.
Additional metrics contributing to the neutral outlook include long-term holders increasing sell pressure and 99% of addresses being in profit, potentially incentivizing selling. On-chain metrics such as the Net Unrealized Profit/Loss (NUPL) ratio and the MVRV Z-Score also support the revision to a neutral outlook in the mid-term.
Despite the medium-term adjustment, Fidelity maintains a positive short-term outlook for Bitcoin, noting some potential for short-term profit-taking at the end of Q1, 2024. The company cites price levels remaining above a “golden cross” on the Bitcoin chart, indicating bullish momentum.
On-chain data, including Bitcoin’s realized price and continued accumulation by smaller investors, suggests ongoing market health. Exchange balances have declined as more investors move to self-custody, reducing selling pressure. Fidelity’s director of research, Chris Kuiper, notes that the market is currently in a middle-ground or halfway point of the cycle, historically preceding significant price gains in the latter half.
Bitcoin has remained range-bound since late February, fluctuating between resistance at $72,000 and support at $60,000. However, it has gained 5% since the recent halving event and is currently trading at a ten-day high of $66,863, according to Cointelegraph data
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