Fidelity Digital Assets says Bitcoin’s latest decline has pushed the market into a zone historically aligned with accumulation phases, even as the momentum signal remains negative and broader crypto risk appetite remains subdued.
In his signals Report In the second quarter of 2026, Fidelity’s research team described a market that is still in a corrective phase rather than entering broad expansion. Bitcoin remains the dominant source of unrealized profitability in the digital asset complex, while other major assets continue to stabilize after a sharp reset in the first quarter.
Fidelity says Bitcoin looks undervalued
The clearest Bitcoin price signal from the report comes from the asset’s ‘Yearstick’, a valuation framework that compares Bitcoin’s market capitalization to its hash rate. Fidelity rated the metric favorably, noting that falling prices and a drop in hash rate have pushed the indicator into what it calls an “undervalued” zone.
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“Historically, this undervalued zone has adapted to accumulation phases and relative bottoms,” the report said.
According to Fidelity, Bitcoin spent 71 of the previous 91 days, or 78% of the period, below the negative standard deviation of the benchmark’s mean. The condition first occurred in October 2025 and was exacerbated by two cold weather events in the United States that temporarily limited mining activity as operators reduced power consumption to support local grid stability.
That nuance matters. Fidelity does not view the drop in hash rate simply as a sign of deteriorating trust among miners. The report said some analysts have linked the decline to miners’ shift to AI workloads, but argued that the move could also reflect demand response programs, especially in regions like Texas, where miners are routinely turned off during peak power grid demand.
The price environment remains difficult. Fidelity’s momentum signal for Bitcoin turned negative on October 18, 2025, when BTC was worth almost $107,000. Since then, Bitcoin has fallen about 36%, spending most of the first quarter of 2026 between $62,500 and $76,022. The company said this pattern is more consistent with consolidation rather than a renewed trend.
“This signal is not intended to identify precise tops or bottoms,” Fidelity wrote, adding that the current reading points to stabilization rather than new upward momentum.
Bitcoin’s NUPL score also reflects a cautious market. Fidelity said BTC’s net unrealized gain/loss at the end of Q1 2026 was 0.21, putting investors in the “Hope-Fear” zone. This reading suggests that some holders are still making profits, but the market is not yet widely convinced that a sustainable bottom is in place.
The historical design is more constructive. Fidelity found that previous periods when Bitcoin’s NUPL hovered around 0.21, plus or minus 0.01, coincided with a one-year average return of 63% and a three-year compound annual growth rate of 74%. However, the company emphasized that these historical relationships may weaken or fail to persist, especially when macro conditions dominate digital asset flows.
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Separately, Fidelity’s Jurrien Timmer pointed to a more tactical Bitcoin setup, sharing a chart showing BTC testing the upper limit of what he described as a potential bear flag. The chart puts Bitcoin near $79,486 after recovering from February’s low around $60,033, with momentum indicators back in overbought territory.
Timmer interpreted the current setup as an important technical test. “Technical Analysis 101 states that when bear market rallies become overbought, it is usually the kiss of death and time to sell,” he wrote. “However, during bull markets, overbought momentum means the market is strong and likely to remain strong.”
His conclusion sharpened the pricing question raised in Fidelity’s broader report: whether Bitcoin is still trapped in a corrective structure or starting to transition into a new bull phase. “If Bitcoin cannot be brought down by this current combination of overbought momentum and trendline resistance, then this is an emerging bull market and not a bear market rally,” Timmer said, adding that this was “his hunch all along” and “may be about to be confirmed.”
At the time of writing, BTC was trading at $76,036.
Featured image created with DALL.E, chart from TradingView.com