7 months ago
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Fidelity continues to have a “neutral” outlook for Bitcoin stating that BTC is fairly priced with on-chain indicators also showing strength.
Recovering from the lows of under $60,000, Bitcoin price gave a good bounce back to above $66,000 during the halving period over the last week. Following nearly 70% gains during the first quarter of 2024, Fidelity Digital Assets has recently revised its medium-term outlook for Bitcoin from “positive” to “neutral”.
The financial noted that the current selling pressure in Bitcoin comes as BTC no longer remains “cheap”. On Monday, April 22, Fidelity Digital Assets published its latest Signals report stating that the Bitcoin Yardstick, or Hashrate Yardstick, works in a similar way to the price-to-earnings ratio in the traditional stock market. Thus, the Hashrate Yardstick helps to understand whether Bitcoin is undervalued.
Fidelity observed that the Yardstick maintained its position between a negative one and zero deviations from the mean of 51% throughout the first quarter. This implies that there were no days in Q1 when Bitcoin was deemed ‘cheap’.
As a result, Fidelity suggests that Bitcoin is currently trading at “fair value”, leading the company to revise its medium-term outlook for Bitcoin to neutral. Among the metrics contributing to this neutral stance, Fidelity highlighted the increasing sell pressure from long-term holders and the fact that 99% of addresses are currently in profit, potentially incentivizing selling.
Fidelity: On-Chain Data Shows a Positive Outlook for Bitcoin
Fidelity Digital Assets has also maintained a positive outlook in the near term for Bitcoin adding that the end of Q1 2024 clearly hinted at the potential of profit taking. The investment firm also stated that there were “no extreme indicators that are commonly seen during bull market peaks”.
Furthermore, Fidelity added that throughout Q1, the BTC price levels remained above the “golden cross” trading above its 50-day and 200-day moving averages. This clearly hints at an ongoing bullish momentum for the asset class.
“We believe on-chain indicators are now clearly above the lows or extreme bottoms previously observed,” said Fidelity’s director of research Chris Kuiper. Furthermore, on-chain data shows a strong accumulation by smaller investors, as the number of addresses holding $1,000 worth of BTC has grown by 20% since the beginning of 2024 while hitting a new all-time high.
Moreover, exchange balances have continued to decrease as more investors opt for self-custody, thereby diminishing selling pressure.
Kuiper remarked:
“We’re far from the historical peak highs. This positions us in a midpoint or intermediate stage of the market cycle.”
“Historically, a significant portion of price increases happens during the latter phase of the cycle,” added he.
