Key Points
- Fidelity Digital Assets has revised its medium-term outlook for Bitcoin from “positive” to “neutral”.
- The company suggests that Bitcoin is currently trading at “fair value”, with increasing sell pressure from long-term holders.
Fidelity Digital Assets has updated its medium-term outlook for Bitcoin, moving from a “positive” to a “neutral” stance.
This comes after Bitcoin’s price bounced back to over $66,000, following a drop to under $60,000.
Bitcoin’s Value According to Fidelity
The financial institution has stated that Bitcoin’s selling pressure is due to the fact that it is no longer “cheap”.
In its latest Signals report, Fidelity explained that the Bitcoin Yardstick or Hashrate Yardstick, is similar to the price-to-earnings ratio in the traditional stock market.
This tool helps to determine whether Bitcoin is undervalued.
Throughout Q1, the Yardstick remained between a negative one and zero deviations from the mean of 51%, indicating that Bitcoin was not deemed ‘cheap’ at any point.
Fidelity suggests that Bitcoin is now trading at “fair value”, leading to the revision of its medium-term outlook to neutral.
Factors contributing to this stance include increasing sell pressure from long-term holders and the fact that 99% of addresses are currently in profit, potentially encouraging selling.
Positive Near-Term Outlook
Despite its revised medium-term outlook, Fidelity Digital Assets maintains a positive near-term outlook for Bitcoin.
It stated that the end of Q1 2024 hinted at the potential for profit-taking, but there were no extreme indicators typically seen during bull market peaks.
Throughout Q1, Bitcoin’s price remained above the “golden cross”, trading above its 50-day and 200-day moving averages, indicating ongoing bullish momentum.
Fidelity’s director of research, Chris Kuiper, said that on-chain indicators are now clearly above the lows or extreme bottoms previously observed.
On-chain data shows strong accumulation by smaller investors, with the number of addresses holding $1,000 worth of Bitcoin growing by 20% since the start of 2024, hitting a new all-time high.
Furthermore, exchange balances have continued to decrease as more investors opt for self-custody, reducing selling pressure.
Kuiper stated, “We’re far from the historical peak highs. This positions us in a midpoint or intermediate stage of the market cycle.”
He added that historically, a significant portion of price increases happens during the latter phase of the cycle.
