Fidelity Revises Down Medium-Term Outlook For Bitcoin To ''Neutral,'' Short-Term Outlook Remains Positive

Fidelity Revises Down Medium-Term Outlook For Bitcoin To ”Neutral,” Short-Term Outlook Remains Positive

Updated: 23 April 2024

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Fidelity Digital Assets has downgraded its medium-term outlook for Bitcoin from “positive” to “neutral” after a significant price increase during the first quarter.

In its latest Signals report, Fidelity said the Bitcoin Yardstick, used to assess whether Bitcoin is undervalued and similar to a price/earnings ratio for stocks, was at between negative one and zero deviations from the mean for 51% of the first quarter.

That shows that BTC is no longer undervalued and is trading at “fair value,” Fidelity says. But it noted that a higher deviation, showing relatively expensive Bitcoin, has “historically preceded bull markets.”

The ratio is achieved by dividing Bitcoin’s market cap with its hash rate.

Where are we at in the digital asset cycle?

Our latest Signals report just dropped and we changed a couple of our outlooks for #bitcoin.

Most notably the mid-term outlook is now "Neutral" from "Positive" last quarter. Why?https://t.co/Dx042hZlzV

— Chris Kuiper, CFA (@ChrisJKuiper) April 22, 2024

The report further says that the percentage of Bitcoin addresses in profit surpassed 99% by the end of the first quarter, suggesting a sell-off was more likely as investors look to take profits.

Bitcoin’s Short-Term Outlook Remains Positive

Fidelity noted that Bitcoin’s 50-day moving average remained above the 200-day SMA during the first quarter, creating a “golden cross.” This indicates a strong bull market and a positive outlook for the short term.

Small investors with holdings of at least $1,000 have continued to accumulate BTC, pointing toward high demand, it said. These small addresses are at all-time high levels, and could drive the price action, it added.

The Bitcoin price has soared more than 50% so far this year and is up around 3% since the Bitcoin halving. It was trading at $66,175 at 05:49 a.m. EST.