Fidelity Digital Assets has revised its medium-term forecast for Bitcoin (BTC) from “positive” to “neutral,” according to its recent Signals report. This adjustment comes after evaluating Bitcoin’s valuation in the first quarter and observing potential selling pressures that make it less appealing at current prices. Fidelity uses the Bitcoin Yardstick, similar to the price-to-earnings ratio in stock evaluations, to determine if Bitcoin is undervalued. The Yardstick indicated that Bitcoin fluctuated between a negative one and zero deviations from its mean of 51% in Q1, indicating the absence of cheap days for Bitcoin. As a result, Fidelity now considers Bitcoin to be trading at “fair value” and has adjusted its medium-term outlook to neutral. Several factors support this revised stance, including increased selling pressure from long-term holders and the fact that 99% of Bitcoin addresses are currently in profit, which may lead to selling. Other on-chain indicators, such as the Net Unrealized Profit/Loss ratio and the MVRV Z-Score, also contribute to this neutral assessment. Despite the neutral medium-term forecast, Fidelity maintains a positive outlook in the short term, acknowledging the potential for profit-taking as Q1 concludes but noting the absence of extreme indicators associated with bull market peaks. Bitcoin demonstrated bullish momentum throughout Q1, consistently trading above its 50-day and 200-day moving averages. Fidelity’s Research Director, Chris Kuiper, expressed a positive outlook, highlighting the significant rise in on-chain indicators. The firm’s report also emphasized Bitcoin’s realized price, which serves as a solid support level at approximately $28,000. Data also revealed an increase in on-chain accumulation by smaller investors, with the number of addresses holding Bitcoin valued at $1,000 or more rising by 20% since the start of the year. Additionally, more investors are opting for self-custody, reducing selling pressure. Kuiper clarified that the market is currently in the middle of the market cycle and not approaching historical extreme highs yet. Bitcoin has recently experienced a modest uptick, reaching a ten-day high of $66,863 after the halving event.
