Fidelity Digital Assets Updates Medium-Term Outlook for Bitcoin to Neutral 

Fidelity Digital Assets, though retaining the positive short-term outlook for Bitcoin, revised the medium rating for Bitcoin to neutral. The revised outlook for Bitcoin, announced shortly after the first quarter, labels the lead crypto by market value as neutral.

Fidelity explained that revising the medium outlook to neutral arises from several metrics. Fidelity observed that Bitcoin had shed its cheap profile amid building sales pressure. 

Fidelity Downgrades Bitcoin to Neutral in Medium-Term Outlook

The recent signals report by Fidelity Digital Assets on Monday, April 22, acknowledged the Bitcoin Hashrate, a metric akin to the price-to-earnings ratio deployed in stocks. The Yardstick constitutes a critical metric to ascertain Bitcoin’s undervaluation. 

Fidelity observed that the Yardstick had retained deviations between -1 and zero from the 51% mean realized in the first quarter. Fidelity noted zero days remained in Quarter 1 when Bitcoin was considered cheap.

Fidelity explained that the -1 to zero deviations illustrate that Bitcoin is exchanging hands at fair value. The change necessitates Fidelity to revise the medium-term outlook from a positive to a neutral rating. 

Long-Term Bitcoin Holders Incentivizing Selling Pressure

Fidelity Digital utilized other metrics that also pointed towards the neutral outlook. Fidelity illustrated that long-term holders were elevating the selling pressure, with 99% of the addresses in the profit zone likely incentivizing selling. 

The investment firm also utilized several on-chain metrics to back up its revision of Bitcoin forecast to neutral in the mid-term. The firm used the Net Unrealized Profit/Loss (NUPL) ratio besides the MVRV Z-Score, often deployed to ascertain whether Bitcoin is overvalued, undervalued, or trading at fair value. 

Extreme Indicators Absent in Bitcoin

Fidelity retained the positive outlook for Bitcoin in the short-term forecast. The investment firm explained the existence of potential profit-taking as the Q1 end approaches. The firm ruled out the existence of extreme indicators often witnessed during the bull market peaks.

Fidelity Digital Assets noted that price levels are above the golden cross on the crypto chart. It leaves Bitcoin trading exchanging hands above the 50-day and 200-day moving averages in quarter 1, thus indicative of the bullish momentum. 

The research director at Fidelity, Chris Kuiper, revealed in a Tuesday, April 23 post on X that the firm considers on-chain indicators clearly above the extreme bottoms witnessed earlier.  

The Signals report cited Bitcoin’s realized price as the metric intended to illustrate the average cost basis of all the coin holders. The firm observed that the realized price remained $28,000 by the end of Q1, a support position retained since mid-January. 

On-chain data illustrated that smaller investors have an uninterrupted accumulation run. The firm reports that addresses holding over $1000 had increased by 20$ since the onset of this year to hit an all-time high. 

The investment firm noted that exchange balances were declining amid a preference for self-custody platforms. Doing so counters the selling pressure. 

Kuiper observed that the industry is miles away from witnessing the historical highs. The situation leaves the investment channels at the halfway point of the current market cycle. 

Kuiper notes that Bitcoin has historically experienced a disproportionate price gain after the mid-cycle. 

Reflection on Bitcoin Price Movement

A review of Bitcoin shows that the token has retained a range-bound movement since the last week of February. The Bitcoin price has oscillated within the $60,000 to $72,000 range.

Bitcoin weathered potential declines since the fourth halving event to change hands at $66,158, a 4.6% gain in the seven-day run, as per CoinGecko data. 

Meanwhile, Bitcoin realized $18.804 billion in trading volume in the past 24 hours. It represents a 22.60% decline to signal the plunge in market activity. The Bitcoin price is 10.38% below its all-time high realized on March 14 when it hit $73,737.94, as per CoinGecko. 

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