Tiger Research: Downgrade Bitcoin valuation for Q2 2026

Key Points

This report is authored by Tiger Research. The macro environment remains supportive, despite a slowdown in pace: global M2 has hit a record high of $13.44 trillion, Bitcoin ETF capital flows have turned into a net inflow for the first time in 14 months. However, the oil shock triggered by the Iran conflict pushed March CPI up to 3.3%, narrowing the Fed’s rate cut path.

On-chain Bitcoin indicators are shifting from undervaluation toward early equilibrium: key on-chain metrics have exited the panic zone seen in Q1. Currently, the price is $70.5k, about 13% below the long-term holder average entry cost of $78k. Breaking above this level would be a major short-term trend reversal signal.

The target price of $143k and a 2x upside potential still stand: based on a neutral benchmark of $132.5k, adjusted with -10% for fundamentals and +20% for macro factors. While the target of $185.5k from Q1 has been lowered, the significant retracement in spot prices actually broadens the real upside potential from current levels.

Macro tailwinds persist, but momentum has slowed

Since the first quarter report, Bitcoin has declined about 27%, with April’s average hovering around $70.5k. The Iran conflict introduced a new variable, but the overall macro environment remains favorable. The difference is not in direction but in speed.

Liquidity at record highs, but not effectively transmitted to Bitcoin

As of February 2026, global M2 continues to expand to nearly $13.44 trillion, a record high. Yet, Bitcoin has fallen 27% from Q1. Liquidity and price are moving in opposite directions.

The source of liquidity explains this divergence. Over the past year, more than 60% of M2 growth in the four major economies (China, US, Eurozone, Japan) came from China, thanks to the People’s Bank of China’s reserve requirement ratio cuts and the shift to easing stance in Q1.

US contribution is only 10%. The issue is limited channels for liquidity from China to reach Bitcoin markets. Domestic crypto restrictions remain, and indirect channels via Hong Kong and Singapore mainly serve institutional funds. Global liquidity is at a historic peak, but the share reaching Bitcoin is shrinking.

Iran conflict slows Fed rate cut pace

Due to constrained liquidity transmission from China, USD liquidity remains the main driver for Bitcoin. But even this has been delayed by the Iran conflict.

After the US and Israel launched strikes on Iran on February 28, the Strait of Hormuz was blocked. Brent crude surged to $118/barrel in mid-March, Dubai crude hit a record high of $166/barrel. This shock directly pushed up inflation. US March CPI rose from 2.4% in February to 3.3%, a two-year high. The Fed’s rate cut room has narrowed accordingly. The March dot plot revised down the 2026 rate cut expectation to just once.

Nevertheless, the easing stance remains unchanged. In mid-April, parts of the Strait of Hormuz reopened, and oil prices fell sharply back to around $90. Core CPI stabilized at 2.6%, indicating the shock has not fully propagated through the economy. President Trump officially nominated Kevin Warsh as the next Fed Chair at the end of January, with Senate confirmation hearings underway. Powell’s term ends on May 15, and easing is likely to continue. The number of rate cuts may decrease, but the direction remains unchanged.

Institutional capital flow begins to reverse

The outflows that drove Q1 declines are starting to reverse. Bitcoin spot ETFs, launched in November 2025, experienced their worst monthly outflows and have been in net outflow for five consecutive months. However, since March, monthly net inflows have turned positive. By mid-April, cumulative capital flow for the year turned positive, with total assets under management rising to $96.5 billion.

Corporate accumulation is also accelerating. Strategy bought 34,164 BTC worth $2.54 billion in a single week (April 13-19), increasing total holdings to 815,061 BTC. However, the number of companies participating in this trend has not significantly increased.

Macro indicators revised down to +20%

Structural tailwinds remain intact: liquidity expansion, policy easing bias, institutional capital flow returning to positive, and progress on the US CLARITY Act. Recent headwinds—oil shocks from Iran and slowing Fed rate cuts—partially offset these positives. Macro indicators for Q2 are revised down by 5 percentage points from Q1, to +20%.

From undervaluation to early equilibrium

On-chain metrics have exited extreme panic zones, transitioning from undervaluation toward early recovery. Key indicators like MVRV-Z, NUPL, and aSOPR have moved out of Q1’s panic zones into early repair stages. While large surges during panic rebounds are unlikely, historical data shows that starting from this zone, one-year average returns remain in double digits. The risk-reward ratio is still most favorable at this point.

Notably, the average cost basis for short-term holders (STH) is gradually declining. This suggests speculative funds are exiting, while new buyers are accumulating at lower prices. The timing aligns with ETF net inflows resuming and large-scale buying by Strategy, supporting the view that institutional investors are continuously accumulating in discount zones, lowering their average entry costs.

The key risk level is $54k, which is the network’s average cost basis. Falling below this would put the entire network into unrealized losses, representing an extreme bottom scenario. The strongest resistance is at $78k, coinciding with the long-term holder average entry cost.

Current price at $70.5k is about 13% below this resistance, with many recent short-term entrants in unrealized loss. A decisive break above $78k in the near term warrants close attention.

Surface growth, underlying stagnation

In the first half of April, Bitcoin’s daily trading volume reached 564k transactions, up 37.9% YoY. The surface data looks impressive, but the details tell a different story.

Active addresses declined to 428k, down 13.2% YoY and 4.2% MoM. Average transfer size dropped to 1.19 BTC, a 34.1% decrease from the previous quarter’s 1.80 BTC. Transaction count increased, but participation and per-transaction value both declined. This pattern reflects a small number of users repeatedly making small transfers, rather than broad economic activity. Much of the volume increase may come from exchange deposits and mechanical flows, not genuine growth.

The Q1 report maintained fundamental metrics at 0%, based on expectations of BTCFi ecosystem expansion. By Q2, this thesis has weakened significantly. According to The Block’s “2026 Digital Asset Outlook,” Bitcoin’s Layer 2 TVL has fallen 74% year-to-date, BTCFi’s total TVL down 10%, representing only 0.46% of total Bitcoin supply (91,332 BTC). While protocols like Babylon and Lombard have seen some growth, the overall ecosystem has contracted.

Fundamental metrics revised down to -10%

Surface growth has not translated into real network expansion; underlying data supporting BTCFi has weakened. The balance of positive and negative signals seen in Q1 has been broken. For Q2, fundamental metrics are revised down from 0% to -10%.

Target price $143k, still with 2x upside potential

Using the TVM method, based on the average price in early April 2026, the neutral benchmark is set at $132.5k. After adjusting for -10% fundamentals and +20% macro factors, the 12-month target price is $143k.

This is about 23% lower than the Q1 target of $185.5k. However, the actual upside potential has increased. From the average price perspective, the upside expands from +93% in Q1 to +103% in Q2.

Lowering the target does not imply pessimism. The macro outlook and on-chain structure still support a long-term bullish thesis.

Three short-term watch points:

• Decisive breakout above the mid-term equilibrium at $78k;
• Continued net inflows into ETFs;
• Fed policy shift following easing of geopolitical risks.

If all three conditions are met, the $143k target remains achievable.