Fidelity Digital Assets, a firm specializing in the management and trading of prominent cryptocurrencies, recently adjusted its mid-term perspective on Bitcoin. Initially, the company held a positive outlook on Bitcoin's price trajectory. However, after reviewing several pivotal indicators, Fidelity shifted its stance to neutral. This revision is significant as it reflects a cautious approach to Bitcoin's future market performance, suggesting that the earlier enthusiasm about price rises may be tempered by new data and market conditions.
In their latest "Signals" report, dated April 22, Fidelity Digital Assets detailed the performance of specific metrics, such as the Bitcoin Yardstick or Hashrate Yardstick. Throughout the first quarter of the year, this indicator showed values ranging from negative to zero deviation from a 51% average. This metric suggests that Bitcoin was never undervalued during this period, as it never reached the "cheap" status based on this benchmark. This observation underpins Fidelity’s decision to adopt a neutral stance, indicating a balanced view of Bitcoin’s pricing relative to its historical performance and inherent volatility.
Fidelity's analysis also extends to the behavior of long-term Bitcoin holders. According to the firm, these investors are showing signs of increased readiness to sell, as evidenced by the fact that 99% of Bitcoin addresses held by them are currently profitable. This situation could lead to greater market liquidity but might also apply downward pressure on Bitcoin prices if a significant number of these investors decide to cash out their gains.
The report also pays close attention to analytical tools like the Net Unrealized Profit/Loss (NUPL) and the MVRV Z-Score. These indicators are essential for assessing whether Bitcoin is currently overvalued or undervalued compared to its perceived fair value. Such metrics are crucial for Fidelity and its clients to understand the broader economic landscape of Bitcoin and anticipate potential market shifts that could affect investment strategies.
Despite the neutral mid-term outlook, Fidelity maintains an optimistic view of Bitcoin's short-term price movements. The report highlights that there are no extreme market indicators that typically precede market tops, suggesting that there may still be room for upward movement in Bitcoin’s price in the near future. This optimism is supported by Bitcoin's performance in relation to the "golden cross" on price charts, where the 50-day moving average remains above the 200-day moving average—a traditionally bullish signal in market analytics.
Lastly, Fidelity addressed the concept of Bitcoin’s realized price, which represents the average cost base of all current Bitcoin holders. By the end of the first quarter, this figure stood at approximately $28,000, serving as a support level since mid-January. Furthermore, blockchain data indicates a trend of accumulation among smaller investors, with a significant increase in the number of addresses holding at least $1,000 worth of Bitcoin. This trend towards accumulation, coupled with declining Bitcoin balances on exchanges—as investors opt for self-custody—suggests a reduced propensity to sell in the short term, potentially stabilizing prices.
Chris Kuiper, director of research at Fidelity Digital Assets, emphasizes the importance of considering Bitcoin’s position near its historical highs, suggesting that the cryptocurrency is mid-cycle in terms of market dynamics. He reminds us that Bitcoin’s all-time high of about $73,700 was recorded on March 14, and since then, the price has seen a slight decline. However, Kuiper notes that historically, significant price increases for Bitcoin have often occurred in the latter half of market cycles, hinting at possible future gains if historical patterns hold true.
23.04.2024
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