Fidelity Digital Assets says Bitcoin’s recent declines have pushed the market into a zone that has historically been consistent with accumulation phases, even though the momentum signal remains negative and the broader crypto risk appetite remains subdued.

In your signals Report In the second quarter of 2026, Fidelity’s research team described the market as still undergoing a corrective phase rather than entering a broad expansion. Bitcoin remains the dominant source of unrealized yield across the digital asset convoluted, while other major assets continue to stabilize after a keen reset in the first quarter.

Fidelity says Bitcoin looks undervalued

The clearest Bitcoin price signal in the report comes from the asset’s “Yardstick,” a pricing platform that compares Bitcoin’s market capitalization to its hash rate. Fidelity gave the metric a positive rating, noting that falling prices and a decline in the hash rate have pushed the metric into the so-called “undervalued” zone.

“Historically, this underappreciated zone has coincided with accumulation phases and relative bottoms,” the report said.

According to Fidelity, Bitcoin spent 71 of the previous 91 days, or 78% of that period, below negative one standard deviation of the Yardstick average. The problem first emerged in October 2025 and was exacerbated by two frigid days in the United States that temporarily curtailed mining activities as operators reduced power consumption to ensure local grid stability.

This nuance matters. Fidelity doesn’t see the hashrate decline solely as a sign of deteriorating miner confidence. The report pointed out that some analysts linked the decline to miners shifting to AI, but argued that the move could also reflect demand response programs, particularly in regions like Texas where miners routinely turn off power during peak demand on the grid.

The pricing backdrop remains challenging. Fidelity’s momentum signal for Bitcoin turned negative on October 18, 2025, when BTC was trading near $107,000. Since then, Bitcoin’s price has dropped by approximately 36%, with most of the first quarter of 2026 being spent in a specific range of $62,500 to $76,022. The company said this pattern is more consistent with consolidation than with a renewed trend.

“This signal is not intended to accurately identify tops or bottoms,” Fidelity wrote, adding that the current reading indicates stabilization rather than a up-to-date uptrend.

Bitcoin’s NUPL score also reflects a cautious market. Fidelity reported that BTC’s net unrealized gain/loss at the end of Q1 2026 was 0.21, placing investors in the “Hope-Fear” zone. This reading suggests that some holders of the company are still making profits, but the market has not yet established broad belief that a sustainable bottom exists.

The historical arrangement is more constructive. Fidelity found that previous periods in which Bitcoin’s NUPL fluctuated around 0.21 plus or minus 0.01 coincided with a median annual return of 63% and a three-year compound annual growth rate of 74%. However, the company stressed that these historical links may weaken or fail to persist, particularly when macro conditions dominate digital asset flows.

Separately, Fidelity’s Jurrien Timmer pointed to a more tactical setup for Bitcoin, sharing a chart showing BTC testing the upper limit of what he described as a potential bear flag. The chart shows Bitcoin near $79,486 after rebounding from the February low of around $60,033, with momentum indicators returning to overbought territory.

Timmer treated the current setup as an critical technical test. “Technical Analysis 101 states that when bull markets become overbought, it is usually the kiss of death and time to sell,” he wrote. “However, in a bull market, overbought momentum means the market is strong and likely to remain strong.”

His conclusion sharpened a pricing question raised in the broader Fidelity report: whether Bitcoin is still trapped in a corrective structure or is starting to move into a up-to-date bull phase. “If Bitcoin cannot be knocked down by the current combination of overbought momentum and trendline resistance, it will be an emerging bull market, not a bear rally,” Timmer said, adding that this has been his “hunch” all along and “may soon be confirmed.”

At the time of publication, the price of BTC was $76,036.

Featured image created with DALL.E, chart from TradingView.com