Fidelity Digital Assets has adjusted its outlook for Bitcoin from “positive” to “neutral” in the medium term due to various factors indicating that Bitcoin is no longer undervalued and may face selling pressure. In its recent Signals report, Fidelity Digital Assets highlighted the Bitcoin Yardstick, which measures whether Bitcoin is undervalued or not, and found that Bitcoin was not considered “cheap” during the first quarter. This suggests that Bitcoin is now trading at fair value, leading Fidelity to revise its medium-term outlook to neutral. Other metrics, such as long-term holders increasing sell pressure and the majority of addresses being in profit, further support this neutral outlook.
Fidelity also mentioned the Net Unrealized Profit/Loss ratio and the MVRV Z-Score as on-chain metrics that indicate Bitcoin’s valuation relative to its fair value. Despite this revision, Fidelity maintains a positive short-term outlook for Bitcoin, noting that there may be some profit-taking in the near future but no extreme indicators of a market peak. The company points to price levels remaining above a “golden cross” on the Bitcoin chart, indicating bullish momentum.
Fidelity’s director of research, Chris Kuiper, stated that on-chain indicators are now above previous lows, suggesting that Bitcoin is in a middle-ground or halfway point in the market cycle. On-chain data also shows continued accumulation by smaller investors and a decline in exchange balances as more investors opt for self-custody, reducing selling pressure.
Bitcoin has been range-bound since February, fluctuating between $72,000 resistance and $60,000 support. However, it has seen a 5% increase since the weekend halving event and is currently trading at a ten-day high of $66,863.