tl;dr
Fidelity Digital Assets has revised its medium-term outlook on Bitcoin from positive to neutral, citing concerning trends in Bitcoin's market performance. This shift is detailed in their Q1 2024 Signals Report, with factors including the Bitcoin Yardstick, increased sell pressure, and high percentag...
Fidelity Digital Assets has revised its medium-term outlook on Bitcoin from positive to neutral, citing concerning trends in Bitcoin's market performance. This shift is detailed in their Q1 2024 Signals Report, with factors including the Bitcoin Yardstick, increased sell pressure, and high percentage of profitable addresses contributing to the change.
The Fidelity Wise Origin Bitcoin Fund (FBTC) has seen impressive growth, amassing over $8 billion in inflows. It stands as the second-fastest growing Bitcoin ETF since its launch. Despite this success, recent analyses point to a significant shift in Bitcoin’s valuation outlook.
The Bitcoin Yardstick, or Hashrate Yardstick, serves as a key metric, similar to the Price-to-Earnings (PE) Ratio used in traditional stock markets. This ratio compares Bitcoin’s total market cap to its hash rate, which measures the computational energy securing the network.
According to the report, there was not a single day in Q1 when Bitcoin was deemed “cheap.” The cryptocurrency fluctuated between zero and two standard deviations from the mean for half of the quarter. Importantly, values above two deviations typically signal an overvaluation relative to the network’s energy output.
The neutral outlook is further supported by increased sell pressure from long-term holders and a high percentage of profitable addresses, which could encourage selling.
Nonetheless, Fidelity’s outlook is not uniformly cautious. The firm maintains a positive view in the short term, after the profit-taking activities at the end of the first quarter. Moreover, on-chain data indicates ongoing accumulation by smaller investors. The number of addresses holding at least $1,000 worth of Bitcoin increased by 20% since the beginning of the year, reaching new all-time highs.
Also, exchange balances have declined as more investors opt for self-custody, which could reduce selling pressure.
After reaching an all-time high of $73,777 on March 14, Bitcoin experienced a sharp correction, falling to $60,775 within a week. Since then, it has oscillated between $60,000 and $71,800. As of writing, it is trading around $66,000.
Disclaimer: The opinions expressed by the writers at Grow My Bag are their own and do not reflect the official stance of Grow My Bag. The content provided on our site is not intended as investment advice, and Grow My Bag is not an investment advisor. We do not endorse buying or selling any cryptocurrencies or digital assets mentioned in our articles. High-risk investments in Bitcoin, cryptocurrencies, and digital assets require thorough due diligence, and all transfers and trades made are at your own risk. Grow My Bag is not responsible for any potential losses and participates in affiliate marketing.