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. The report shows that all three major crypto assets have suffered double-digit losses year-to-date: Bitcoin is down 25%, Ethereum 31%, and Solana 38%. Part of the decline is attributed to a massive $2.56 billion liquidation event in January.
Bitcoin's Thin Profit Cushion as Market Enters 'Repair Phase'
The report notes that Bitcoin's NUPL of 0.21 implies investors hold only slim unrealized profits, with cautious sentiment. Fidelity's research team emphasizes that while historical data shows similar NUPL levels often preceded a median one-year return of 63%, it does not confirm a stable bottom has formed. Bitcoin's momentum signal turned negative on October 18, 2025, when BTC was trading near $107,000, and has remained negative since; the price has fallen approximately 36% since the signal flipped. During most of Q1 2026, BTC traded between $62,500 and $76,022 as the market struggled to find support.
Ethereum and Solana: Steep NUPL Drops, Capitulation Signals
Ethereum's NUPL plunged 171% in Q1, from 0.17 to -0.12, concurrent with a 29% price decline. Solana's NUPL crashed 148% to -0.67 with a 33% price drop. Both networks showed early signs of stabilization after touching local lows in early February. Fidelity analysts point to two major liquidation events—$2.56 billion on January 30 and $2.13 billion on February 4—that exacerbated the early-year selloff. Macro headwinds, including uncertainty about the Federal Reserve chair nomination amid the 'Coin War' narrative and market expectations of no rate cuts in 2026, have reinforced risk aversion.
Bitcoin Hashrate Declines, Yardstick Indicator Suggests Undervaluation
Bitcoin's Yardstick metric (market cap to hashrate ratio) entered 'undervalued' territory in October 2025 and has remained below one standard deviation from the mean for 78% of the past 91 days. Fidelity notes that similar conditions persisted for approximately 298-299 days in prior bear markets (2018 and 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 reached in September 2025, correlated with price compression and two cold weather events in the U.S. that forced miners to curtail energy usage. Fidelity analysts push back against the narrative of miners 'converting capacity' to AI workloads, stating that Bitcoin mining hardware has specific utility and is more likely to be sold or relocated than repurposed.
Bitcoin Dominance Rises; Stablecoin Transfers Hit Record Highs
The report shows Bitcoin's dominance continued to rise entering Q2 2026 after retracing in the second half of 2025. Fidelity interprets rising dominance as a signal that capital remains concentrated in Bitcoin, with limited rotation into altcoins; a plateau or reversal in dominance could signal an early shift toward risk-on behavior. On Ethereum, on-chain usage metrics painted a different picture: transaction activity increased 34% quarter-over-quarter, while active and new addresses grew 34% and 18% respectively, both exceeding 2021 bull market peaks. Fidelity warns that lower transaction fees typically inflate 'spam activity,' questioning the economic significance of usage growth. Stablecoin transfer value on Ethereum crossed a historical record over the past 12 months, with total transfer volume exceeding $18 trillion; 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 independent of speculative price behavior.
On Solana, stablecoin transfer volumes held steady during the price decline, with the 30-day average transfer value increasing 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, remain in a downtrend. Fidelity researchers describe current market conditions as a 'repair phase' rather than a 'late-cycle profit environment,' stating that any sustained expansion will depend on reduced geopolitical tensions, regulatory clarity, and a clearer Federal Reserve policy path.