Fidelity Digital Assets, a leading issuer of spot Bitcoin ETFs in the United States, has revised its medium-term Bitcoin outlook from positive to neutral.
Fidelity detailed the forecast revision in its Q1 2024 Signals Report, published on April 22. The reason for abandoning optimistic views is several alarming trends in the crypto market.
Yardstick Score Analysis
Bitcoin Yardstick, or Hashrate Yardstick, is a metric similar to the price-to-earnings (PE) ratio used in traditional stock markets. This ratio compares Bitcoin's total market value to its hashrate, which measures the computing energy powering the network.
“The idea is that the lower the ratio, the ‘cheaper’ Bitcoin appears—just as a lower PE ratio can be interpreted as a ‘cheap’ or undervalued stock,” Fidelity explained.
Bitcoin indicator. Source: Fidelity/Glassnode
According to the report, there was not a single day in the first quarter when Bitcoin was considered “cheap”. Analysts concluded that for most of the specified period, BTC traded near the average price — that is, in the range of minus one to zero standard deviations from the average.
At the same time, those values that exceed two standard deviations usually signal that the cost of the asset is inflated in comparison with the energy consumption of the network.
Read also: What is happening in the spot Bitcoin ETF market and how it has changed
Sales pressure intensifies
Fidelity analysts noted growing interest in selling from long-term Bitcoin HODLers. Among them there is now a large percentage of profitable addresses, the report notes.. This means that holders may want to take profits and start selling off BTC.
“We believe that on-chain indicators are now clearly above the lows or extreme lows that were previously observed. However, we are not yet close to all-time extreme highs,” said Chris Kuiper, director of research at Fidelity Digital Assets.
On-chain data also indicates that small investors continue to accumulate the first cryptocurrency. Since the beginning of the year, the number of addresses storing at least $1,000 worth of Bitcoin has increased by 20% and reached a new historical high.
“This demonstrates the continued growth in the number of small addresses that accumulate and hold Bitcoin even as prices rise. The trend may also indicate the growing adoption of Bitcoin and its acceptance among “average” users,” Fidelity notes.
Read also: How the launch of Runes and Bitcoin-based altcoins are transforming the crypto industry
Bitcoin addresses with a balance of more than $1,000. Source: Fidelity/Glassnode
On the night of April 19-20, the fourth halving took place on the Bitcoin network. Read about how BTC responded to the event and what forecast experts give for the asset in our material.