Bitcoin Isn’t Cheap Anymore, Says Fidelity Revising Medium-Term Outlook

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After dipping below $60,000, Bitcoin‘s price rebounded strongly to surpass $66,000 during the recent halving event. Following a 70% price increase in Q1 of 2024, Fidelity Digital Assets has updated their mid-term perspective on Bitcoin from optimistic to neutral.

Fidelity Digital Assets pointed out that Bitcoin’s current selling pressure arises because it is no longer considered a bargain. In their April 22 Signals report, they explained that the Bitcoin Hashrate Yardstick functions similarly to the price-to-earnings ratio in standard stock markets. Consequently, this yardstick assists in determining whether Bitcoin is underpriced.

During the first quarter, Bitcoin’s value remained close to the average of 51%, according to Fidelity’s assessment by Yardstick. In other words, there weren’t any days where Bitcoin was considered underpriced based on this benchmark.

Based on their analysis, Fidelity has determined that Bitcoin is now priced appropriately, causing the firm to adjust its mid-term perspective towards Bitcoin to neutral. Several factors influenced this neutral viewpoint. Firstly, there’s growing unloading pressure from long-term investors. Additionally, almost all wallet addresses are currently in profit, increasing the likelihood of sellers offloading their coins.

Fidelity: On-Chain Data Shows a Positive Outlook for Bitcoin

Fidelity Digital Assets remains optimistic about Bitcoin in the short term, with a strong belief that Q1 2024 could bring profitable opportunities. They also pointed out that current market conditions don’t show any signs of the exaggerated indicators typically seen during bull market peaks.

In addition, Fidelity noted that during the first quarter, Bitcoin’s price stayed above the “golden cross” with the 50-day and 200-day moving averages rising below it. This indicates a persistent bullish trend for the digital currency class.

According to Fidelity’s research director Chris Kuiper, on-chain indicators indicate that they have surpassed their past lows or bottoms. Moreover, smaller investors have been actively accumulating Bitcoin, as evidenced by a 20% increase in the number of addresses holding $1,000 worth of BTC since the beginning of 2024, reaching a new record high.

Additionally, the amount of funds held by exchanges has been declining, as more investors choose to hold their own assets instead of keeping them on trading platforms. This trend reduces the urge to sell.

Kuiper remarked:

“We’re not yet at the historic record-breaking heights, which places us in the middle or halfway point of the market’s upswing.”

In the past, a large percentage of price hikes takes place towards the end of the cycle, according to him.

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2024-04-23 13:54