Fidelity Digital Assets released its Q2 2026 Signals Report on Monday, revealing that Bitcoin's Net Unrealized Profit/Loss (NUPL) stands at just 0.21 — placing BTC in what researchers call the "Hope-Fear" zone, characterized by thin unrealized profits and cautious sentiment. In contrast, Ethereum and Solana remain deep in capitulation territory, underlining the uneven recovery across major cryptocurrencies. The report arrives amid a challenging quarter for crypto markets, with Bitcoin, Ethereum, and Solana posting year-to-date (YTD) losses of 25%, 31%, and 38% respectively, driven by macroeconomic headwinds and severe deleveraging events.
Bitcoin NUPL Hovers at ‘Hope-Fear’ Threshold; Historical Patterns Offer Cautious Optimism
With a NUPL reading of 0.21, Bitcoin investors are positioned in a zone that historically preceded a median one-year return of 63%, according to Fidelity's research team. However, the team cautions that the current reading does not confirm a durable bottom has formed. Ethereum's NUPL plunged 171% during Q1, from 0.17 to -0.12, as its price dropped 29%. Solana's NUPL crashed 148% to -0.67, with SOL declining 33% over the same period. Both networks show early signs of stabilization after touching local lows in early February, but the broader trend remains downward. On a rolling one-year basis, Bitcoin is down 17%, Solana down 33%, while Ethereum is the only positive performer with a 15% gain over the past 12 months.
January Liquidations and Macro Uncertainties Amplify Downtrend
Two massive liquidation events intensified the sell-off early in the year, Fidelity analysts noted. On January 30, the crypto market absorbed $2.56 billion in forced selling, followed by another $2.13 billion on February 4. These events combined with macro headwinds — including ambiguity around the introduction of a "Coin War" nominee for Federal Reserve Chair and shifting market expectations that interest rate cuts will not occur in 2026 — fortified risk aversion across digital assets. Bitcoin's momentum signal turned negative on October 18, 2025, when BTC traded near $107,000, and has remained negative ever since. Since the signal flipped, Bitcoin has declined approximately 36%. Throughout most of Q1 2026, BTC traded in a range between $62,500 and $76,022, as the market struggled to establish support.
Hashrate Decrease and Valuation Indicator Suggest Undervaluation
Fidelity's Yardstick metric, which compares Bitcoin's market capitalization to its hashrate, entered "undervalued" territory in October 2025. Over the past 91 days, 78% of observations have been below one negative standard deviation from the mean. The report notes that prior bear markets experienced similar conditions for 298 days in 2018 and 299 days in 2022, suggesting that October 2026 could be a key reference point for cycle-focused investors. Bitcoin's hashrate has fallen below the 1 ZetaHash per second (ZH/s) milestone first breached in September 2025, correlating with price compression and two cold weather events in the U.S. that prompted miners to curtail energy consumption. Fidelity analysts resist the narrative of miners pivoting to AI workloads, emphasizing that Bitcoin mining hardware has a dedicated application and is more likely to be sold or relocated than repurposed.
Ethereum Stablecoin Transfers Surpass $18 Trillion; Solana Active Addresses Surge
Despite price weakness, Ethereum's on-chain usage metrics painted a different picture. Transaction activity rose 34% quarter-over-quarter, while active and new addresses grew 34% and 18% respectively, both surpassing 2021 bull market peaks. However, the research team warns that lower transaction fees typically inflate spam activity, raising questions about whether the usage growth is economically meaningful. Stablecoin transfer value on Ethereum surpassed a historical record of $18 trillion over the past 12 months, with the 30-day average rising 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 independent of speculative price activity. On Solana, stablecoin transfer value 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, continued to trend lower.
Market in ‘Repair Phase’; Bitcoin Dominance Continues to Rise
Fidelity researchers describe the current market conditions as a "repair phase," not a late-cycle profit-taking environment. They state that any sustainable expansion depends on easing geopolitical tensions, regulatory clarity, and a clearer path for Federal Reserve policy. Bitcoin's dominance continued to grow entering Q2 2026, following a retreat in the second half of 2025. The report treats rising dominance as a signal that capital remains concentrated in Bitcoin, with limited rotation into altcoins. A plateau or reversal in dominance could be an early indication of a shift toward more risk-on behavior.