Fidelity Digital Assets released its Q2 2026 Signals report on Monday, revealing that Bitcoin's Net Unrealized Profit/Loss (NUPL) score stands at just 0.21, placing it in the 'Hope-Fear' zone, while Ethereum and Solana remain deep in capitulation territory.
Key Findings: BTC Holds Thin Profit Cushion; ETH and SOL under Pressure
According to the report, Bitcoin's NUPL of 0.21 indicates minimal unrealized profits and cautious sentiment among investors. Fidelity's research team notes that historically, similar NUPL levels have preceded an average one-year forward return of 63%, but they stop short of confirming a sustainable bottom has been formed.
Ethereum's NUPL plunged 171% during Q1 2026, falling from 0.17 to -0.12, as its price dropped 29%. Solana's NUPL collapsed 148% to -0.67, with SOL's price declining 33% over the same period. Both networks show early signs of stabilization after touching local lows in early February, but remain in capitulation.
Year-to-Date Performance: All Three Assets in the Red
As of the report's publication, Bitcoin is down 25% year-to-date, Ethereum has fallen 31%, and Solana has declined 38%. Rolling one-year figures paint a slightly different picture: Bitcoin is down 17%, Solana down 33%, while Ethereum is up 15% over the past twelve months.
Fidelity analysts attribute the early-year sell-off to two major deleveraging events: $2.56 billion in forced liquidations on January 30 and another $2.13 billion on February 4. These were compounded by macro headwinds including uncertainty surrounding the nomination of Kevin Warsh as Fed Chair and shifting market expectations for no rate cuts in 2026, fueling risk-off sentiment across digital assets.
Bitcoin Momentum Signal Remains Negative; Hashrate Pulls Back
Bitcoin's momentum signal turned negative on October 18, 2025, when BTC traded near $107,000, and has remained in negative territory since. BTC has since declined approximately 36%. During most of Q1 2026, Bitcoin traded in a $62,500 to $76,022 range as the market struggled to establish support.
Fidelity's Yardstick indicator, which compares Bitcoin's market value to hashrate, entered the 'undervalued' zone in October 2025. 78% of the past 91 trading days have been below one negative standard deviation from the mean. Historical bear markets experienced similar conditions for 298 days in 2018 and 299 days in 2022, suggesting October 2026 could be a key reference point for cycle-focused investors.
Bitcoin's hashrate has fallen below the 1 ZH/s milestone first breached in September 2025, correlating with price compression and two cold weather events in the U.S. that forced miners to curtail energy consumption. Fidelity analysts push back against the narrative of miners pivoting to AI workloads, stating that Bitcoin mining hardware is purpose-built and more likely to be sold or relocated than repurposed.
Ethereum On-Chain Activity Grows; Stablecoin Transfers Hit Record High
Ethereum transaction activity increased 34% quarter-over-quarter, with active and new addresses rising 34% and 18% respectively, both exceeding the 2021 bull market peaks. However, Fidelity warns that lower transaction fees typically inflate spam activity, raising questions about the economic significance of usage growth.
Stablecoin transfer value on Ethereum surpassed an all-time record of $18 trillion over the past twelve months. The 30-day average transfer value rose from $59.2 billion to $73.4 billion. Transfer fees remained below $1 for the second consecutive quarter. Fidelity researchers view this as evidence that stablecoins are being used for payments and settlement activities independent of speculative price behavior.
On Solana, stablecoin transfer volumes held steady during the price decline, with the 30-day average rising 8% to $7.2 billion. Monthly active addresses and new addresses on Solana grew 50% and 35%, respectively, in Q1 2026, reaching their highest levels since 2021. Network fees, which peaked during the meme coin frenzy from 2024 to early 2025, continue to trend downward.
Market Outlook: 'Repair Phase' Rather Than Late-Cycle Profit Environment
Fidelity's research team characterizes the current market as a 'repair phase' rather than a late-cycle profit environment. Sustained expansion, they say, depends on easing geopolitical tensions, regulatory clarity, and a clearer path for Fed policy. Bitcoin's market dominance, after retreating in H2 2025, continued to rise heading into Q2 2026, indicating capital remains concentrated in Bitcoin with limited rotation into altcoins. Fidelity notes that a plateau or reversal in dominance could be an early signal of a shift toward risk-on behavior.