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Fidelity Switches Bitcoin Outlook From Positive To Neutral Warning Of Selling Pressure — Is BTC About To Nosedive?

Last Updated April 23, 2024 3:00 PM
Nikola Lazic
Last Updated April 23, 2024 3:00 PM
By Nikola Lazic
Verified by Peter Henn

Key Takeaways

  • Fidelity shifts its Bitcoin mid-term outlook to neutral.
  • Bitcoin’s $67,000 level transitions was its support but is now its resistance.
  • BTC faces two potential scenarios: bearish decline or bullish recovery.

Fidelity Digital Assets, an established provider of Bitcoin ETFs, has updated its mid-term BTC prognosis to a neutral stance, as revealed in its Q1 2024 Signals Report  from April 22. Despite the impressive growth of the Fidelity Wise Origin Bitcoin Fund (FBTC), concerns have emerged from Bitcoin‘s market behavior, prompting the reassessment.

As Bitcoin’s price reached $67,000, its previous ascending support, it could now be turned to resistance. In this post, we will dive into why Fidelity has turned neutral and what we can expect from Bitcoin’s price next. 

Why Did Fidelity Switch Its Stance? 

Fidelity employs the Bitcoin Yardstick, analogous to the traditional P/E Ratio. This correlates Bitcoin’s market capitalization with its hash rate, the computational power underpinning the network. The recent analysis showed Bitcoin’s valuation wasn’t considered “cheap” at any point in the first quarter. It often ranged within two standard deviations from the mean—values that suggest overvaluation.

Bitcoin yardstick
Bitcoin Yardstick | Credit: Glassnode

While long-term holders have increased sell pressure, small-scale investors are actively accumulating, as indicated by a 20% increase in addresses holding Bitcoin worth at least $1,000. This trend, coupled with declining exchange balances due to a preference for self-custody, may alleviate some selling pressure.

number of Bitcoin addresses
Bitcoin Addresses with more than $1,000 | Credit: Glassnode

Bitcoin (BTC) Reaches $67,000 Resistance 

After hitting a high of nearly $74,000 on March 13, Bitcoin experienced fluctuations, momentarily dipping below $60,000 on April 17. This peak in March is considered the third phase of a five-wave pattern that started in November 2022. This suggest the recent downturn is a typical fourth-wave correction, which another surge could follow.

Since its low on April 19, Bitcoin has rebounded by about 12%, reaching $67,000 on April 23, and BTC is now testing its broken ascending support for resistance with two conceivable scenarios.

Bitcoin 1-hour chart
Bitcoin price chart

On the pessimistic side, the March peak could signify the culmination of a significant uptrend that began in January. The current pattern could, potentially, be the beginning of a significant decline. The first drop, ending  on March 20 at $61,000 and its subsequent recovery to $72,900 in April are its first two sub-waves, leaving the third one in development. 

Projecting with the Fibonacci extension tool, we reach a target of $53,000 at the 1.618 level. This could be the conclusion of its corrective stage, after which we can see Bitcoin continuing its bull market. 

However, a bullish scenario might be presented if we see a breakout above $67,000. The recent low could have marked the completion of this ABC correction. This, therefore, could imply that the current recovery is the start of a new upward trend.

Disclaimers

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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