Fidelity Digital Assets released its Q2 2026 Signals Report on Monday, revealing that Bitcoin’s Net Unrealized Profit/Loss (NUPL) score stands at a meager 0.21, placing the largest cryptocurrency in a cautious 'hope-fear' zone where investors hold thin profit margins.
Sharp YTD Declines Across Major Assets
The report highlights a brutal start to 2026 for digital assets. Bitcoin is down 25% year-to-date, Ethereum has fallen 31%, and Solana has tumbled 38%. Two massive liquidation events in late January and early February—totaling $2.56 billion and $2.13 billion respectively—accelerated the sell-off. Macro headwinds, including uncertainty surrounding the appointment of a 'Coin War' advocate as Federal Reserve chair and the fading of rate-cut expectations for 2026, have reinforced risk aversion across the crypto market.
NUPL Signals Cautious Positioning
Bitcoin’s NUPL of 0.21 indicates that the average holder is barely in profit. Historically, similar NUPL levels have preceded a median one-year return of 63%, though the Fidelity research team cautions that a sustainable bottom is not yet confirmed. Ethereum’s NUPL plunged 171% during Q1, from 0.17 to -0.12, as its price dropped 29%. Solana’s NUPL cratered 148% to -0.67, with a 33% price decline. Both networks have shown early signs of stabilization after touching local bottoms in early February.
On-Chain Activity Diverges: Stablecoin Transfers Soar, Miners Struggle
Despite price weakness, stablecoin transfer value on Ethereum surged to a record over $18 trillion over the past 12 months, with the 30-day average rising from $59.2 billion to $73.4 billion. Fidelity researchers view this as evidence that stablecoins are being used for real-world payments and settlement independent of speculative trading. Solana’s monthly active addresses and new addresses grew 50% and 35% respectively in Q1, reaching their highest levels since 2021. Meanwhile, Bitcoin’s hashrate fell below the 1 Zettahash/s milestone first reached in September 2025, correlated with price compression and cold weather events in the U.S. that forced miners to curtail power use. Fidelity pushed back against the narrative of miners pivoting to AI workloads, stating that Bitcoin ASICs are specialized and more likely to be sold or relocated.
Bitcoin Dominance Rises, Market in 'Recovery Phase'
Bitcoin’s market dominance continued to climb in Q1 after a brief retreat in late 2025, signaling that capital remains concentrated in Bitcoin with limited rotation into altcoins. Fidelity characterizes the current environment as a 'recovery phase' rather than a late-cycle profit-taking environment. Sustainable expansion, the report says, depends on easing geopolitical tensions, regulatory clarity, and a clearer path for Federal Reserve policy.