Fidelity’s Q1 2024 Signals Report: Key insights on BTC’s market signals (2024)

Over the past year, certain asset managers and institutional investors have been bullish on crypto. BlackRock, the world’s largest asset manager, as of May 17, held276,759 BTCwith a reported value as of May 20 at$19,194,157,328.Fidelity, another asset manager almost as big as BlackRock, recently published a report,Q1 2024 Signals Report, analyzing BTC and ETH’s current prices and where they could be headed next. The report also discusses theBitcoin price graphover the last three months and the factors affecting it.

“Digital assets are unique in that they not only generate traditional market signals based on price action, but they also generate an entirely new set of signals based on public on-chain data,” the authors explain at the beginning of the report. They also note that choosing the right signals can be challenging, but the report aims to present the most reliable indicators.

BTC Short-term Signals

This report begins with Bitcoin’s short-term measurements, stating,which the authors explain is anything up to one year, stating, “As of the end of Q1, bitcoin’s price has maintained a healthy gap between itself and both the short-term support level of $62,070 and the longer-term support level of $43,343.” The first measurements discussed are BTC’s 50-day simple moving averages against its 200-day SMA. The authors note that the 50-day SMAs have remained well above the 200-day SMA, maintaining the golden cross that played out back in October last year. A golden cross refers to when a short-term moving average passes out through a longer-term moving average from below, which typically signals many green days ahead.

“The price did test the short-term 50-day indicator throughout January, but with the most recent price action, [the] price remains roughly 15% higher,” the report reads in part. “However, it is worth noting that bitcoin’s price has yet to retest the 50-day. This could be indicative of a strong bull market, but we also remind investors that this could be a level where we see a significant pullback, which is a common historical occurrence even within bull markets.”

Another short-term signal is analyzed in the report: BTC’s realized price. This indicator measures the average cost that holders pay to obtain their BTC. “Bitcoin’s realized price is around $28,000 at the close of Q1,” the authors note. “The realized price has maintained a position of support since January 13, 2023. As of March 31, 2024, bitcoin’s price is approximately 156% above its realized price. This tells us that there are high incentives for investors to start taking profits, causing more volatility in the short term. While profit-taking may cause quick price pullbacks, the retracements may be short-lived if demand outweighs selling pressure.”

BTC’s Mid-Term Signals

The next part of the Fidelity Q1 Signals Report looks at BTC’s mid-term indicators (between one and five years). Several mid-term indicators include the Net Unrealized Profit/Loss (NUPL) Ratio, MVRV Z-Score, and Reserve Risk. Of these, NUPL is a major and reliable signal, as the authors note.

“Historically, this metric has been an effective assessment of overall market sentiment,” they explain. As the name suggests, this metric measures the number of people sitting on unrealized gains against portfolios in the red. A score below zero signals that most people are sitting at a loss, usually marking a capitulation zone. A score above zero point five signals that most people are in profit, indicating an imminent pullback.

The report notes, “NUPL score over 0.50 indicates large unrealized profits held on-chain, which may suggest some profit-taking could be likely. This ratio continued to float around the ‘Optimism’ and ‘Belief’ zone throughout January, changing another two times before finally closing Q1 in the ‘Belief-Denial’ zone.”Normally, this could be concerning, but the authors note that catalysts such as the halving event and spot ETF inflows could cement Bitcoin’s position.

BTC’s Long Term Indicators

Fidelity’s report also touches on the long-term indicators affecting BTC’s price. For reference, long-term refers to anything over 5 years. The first metric in the report is the monthly address count. According to Fidelity, “At the end of Q3 2023, active addresses had retaken the millionth address mark for the first time since June 2021.”However, the authors continue to note, “New addresses have continued to fall throughout Q1, roughly 12%. Bitcoin’s transaction count is also down by roughly 34%. While the waning excitement behind BRC-20 tokens may have given some relief to those waiting to consolidate UTXOs (Unspent Transaction Outputs), userdemand for block space has largely fallen.”

Other long-term indicators discussed include Liquid vs. Illiquid supply, new address momentum, and exchange balance. Access the full reporthere.

This information is intended for educational purposes only and is not to be used as investment advice. As with all investments, there is risk, and the past performance of a particular asset class does not guarantee any future performance.

Lee Enterprises newsroom and editorial were not involved in the creation of this content.