Fidelity Says Bitcoin Has Thin Profit Cushion as Macro Risks Drive 25% YTD Decline

Key Takeaways:

• Fidelity Digital Assets rates bitcoin’s Q1 2026 NUPL score at 0.21, placing BTC in the cautious “Hope-Fear” zone.
• BTC, ETH, and SOL fell 25%, 31%, and 38% year-to-date, driven partly by $2.56B in January liquidations.
• Ethereum’s stablecoin transfer value hit an all-time high above $18 trillion, signaling real-world utility growth in Q2 2026.

Bitcoin Investors Barely in Profit as Market Enters ‘Repair Phase,’ Fidelity Says

Bitcoin’s NUPL reading places investors in what Fidelity researchers describe as the “Hope-Fear” zone, a condition marked by modest unrealized profits and cautious sentiment. The reading does not confirm that a durable bottom is in place, though the research team notes that similar NUPL levels have historically preceded a median one-year return of 63%.

The broader picture is less stable. Ethereum’s NUPL fell 171% over the first quarter, from 0.17 to -0.12, as the price dropped 29%. Solana’s NUPL fell 148%, landing at -0.67, while SOL price shed 33% during the same period. Both networks show tentative signs of stabilization after touching local lows in early February.

Year-to-date (YTD) performance across all three assets remains negative. Bitcoin is down 25%, ethereum is down 31%, and solana has fallen 38% since January 1. The one-year rolling picture is more mixed: Bitcoin is off 17%, solana is down 33%, and ethereum is the lone positive, up 15% over the trailing 12 months.

Two large liquidation events accelerated the drawdown early in the year. The crypto market absorbed $2.56 billion in forced selling on Jan. 30 and $2.13 billion on Feb. 4, the Fidelity analysts note. Those events, combined with macro headwinds including uncertainty around the nomination of Kevin Warsh as Fed Chair and market expectations shifting toward no rate cuts in 2026, reinforced risk-off sentiment across digital assets.

Bitcoin’s momentum signal, which turned negative on Oct. 18, 2025, when BTC traded near $107,000, remains in negative territory. Since that signal flipped, bitcoin has declined roughly 36%. For most of Q1 2026, BTC traded between $62,500 and $76,022 as the market worked to establish support.

The Yardstick metric, a measure that compares bitcoin’s market cap to its hashrate, moved into its “undervalued” zone in October 2025. Seventy-eight percent of the past 91 days fell below negative one standard deviation of the mean. Fidelity’s analysts note in the report that prior bear markets saw similar conditions last 298 days in 2018 and 299 days in 2022, suggesting October 2026 may be a key reference point for cycle-focused investors.

Bitcoin’s hashrate fell below the one zettahash per second (ZH/s) milestone first crossed in September 2025. The decline correlates with price compression and two U.S. cold weather events that prompted miners to curtail energy usage. Fidelity’s analysts push back on the narrative that miners are shifting capacity to artificial intelligence (AI) workloads, noting that bitcoin mining hardware is application-specific and more likely to be sold or relocated than repurposed.

BTC dominance continued rising into Q2 2026 after pulling back in the latter half of 2025. The Fidelity report frames expanding dominance as a signal that capital remains concentrated in bitcoin, with limited rotation into altcoins. A plateau or reversal in dominance, the report suggests, could mark an early shift toward risk-on behavior.

Ethereum’s onchain usage metrics showed a different picture. Transaction activity rose 34% quarter-over-quarter, and active and new addresses climbed 34% and 18% respectively, both surpassing peak levels from the 2021 bull market. The research team flags that lower transaction costs tend to invite spam activity, raising questions about whether the usage gains are economically meaningful.

Ethereum’s stablecoin transfer value crossed an all-time high over the past 12 months, exceeding $18 trillion in total transfer volume. The 30-day average transfer value moved from $59.2 billion to $73.4 billion. Transfer costs remained below $1 for a second consecutive quarter. Fidelity researchers interpret this as evidence that stablecoins are being used for payments and settlement activity independent of speculative price behavior.

Solana‘s stablecoin transfer volumes held steady through the price downturn, with the chain’s 30-day average transfer value rising 8% to $7.2 billion. Monthly active and new addresses on Solana rose 50% and 35%, respectively, during Q1 2026, reaching their highest levels since 2021. Network fees, which peaked during the 2024-to-early-2025 meme coin period, remain in a downtrend.

Fidelity’s researchers describe current market conditions as a “repair phase” rather than a late-cycle profit environment, with any sustained expansion dependent on geopolitical de-escalation, regulatory clarity, and a clearer Fed policy path.