Fidelity Q2 Signal Report: BTC Builds Bottom and Gathers Strength for Main Uptrend, ETH and SOL On-Chain Activity Diverges from Price

In the first quarter of 2026, the crypto market experienced a deep correction—Bitcoin has fallen 25% since the start of the year, Ethereum down 31%, Solana down 38%, partly attributable to a wave of forced liquidations totaling approximately $2.56 billion in January. During this broad sell-off, how do institutions view the true state and potential direction of the market? Fidelity Digital Assets provided a systematic answer in their “Q2 2026 Signal Report” released on April 28.

Why Bitcoin Still Serves as the Current Market “Anchor”

In Fidelity’s Q2 report, Bitcoin is defined as the current market cycle’s “primary anchor.” This judgment is based on two core observations: first, capital continues to concentrate in the most liquid asset, Bitcoin, whose market cap share shows an increasing trend during consolidation; second, Bitcoin’s unrealized profit levels and market momentum indicators both demonstrate relative resilience, significantly outperforming other mainstream assets.

From a capital flow perspective, Fidelity also observed an important shift: funds are rotating back from gold into Bitcoin ETFs, reversing the trend seen at the end of 2025. This capital rotation—flowing from safe-haven assets back into crypto—typically occurs just before risk appetite rebounds.

Which On-Chain Indicators Are Suggesting a Bottom Is Forming

Fidelity’s analytical framework does not rely solely on price as the evaluation metric but cross-validates multiple underlying data points to assess market conditions. The report emphasizes key indicators such as unrealized profit levels, market momentum, and network utilization.

Among these, the most representative is NUPL (Net Unrealized Profit/Loss). As of the end of Q1 2026, Bitcoin’s NUPL score was at 0.21, in the so-called “Hope-Fear” zone—this position indicates a structural state where investor profit buffers are thin, often appearing in the mid-to-late stages of correction cycles historically.

Additionally, Fidelity’s “Yardstick” model (comparing market cap to hash rate) issued a signal in October 2025 that Bitcoin had entered an “undervalued zone,” a signal that historically precedes recovery cycles. When combining these on-chain metrics with return indicators, Fidelity judges that overall market momentum aligns with correction-phase characteristics, and the stabilization of underlying data helps lay the groundwork for a more stable market structure.

Why Ethereum’s On-Chain Activity Reached a Record High While Prices Remain Under Pressure

Ethereum and Solana form another key narrative dimension in Fidelity’s report—there is a notable divergence between on-chain activity and price trends. A March report from CryptoQuant also confirmed this phenomenon: in February 2026, multiple on-chain activity metrics for Ethereum hit all-time highs, yet ETH’s price declined 30% over six months, breaking the traditional market rule that higher network activity correlates with stronger price performance.

According to Artemis, an on-chain data platform, Ethereum’s mainnet processed 200.4 million transactions in Q1 2026, up 43% from 145 million in Q4 2025, surpassing 200 million for the first time in a single quarter. This growth was mainly driven by Layer 2 scaling solutions and stablecoin activity.

However, ETH’s price has fallen more than 50% from its cycle high in August 2025. Fidelity’s analysis suggests that this divergence between price and fundamentals indicates that the actual demand at the protocol layer remains intact. From a supply-demand perspective, the ongoing expansion of L2 ecosystems means substantial transaction volume and value are captured on L2 networks, while the value capture mechanism of the mainnet ETH as a settlement asset is undergoing a structural adjustment.

Why Solana’s Price Has Dropped Significantly While On-Chain Usage Has Increased—What Is the Underlying Logic?

Solana’s situation resembles Ethereum’s but with a more pronounced divergence. SOL’s price has retraced about 70% from its peak of approximately $294 in early 2025. As of April 28, 2026, SOL was quoted at around $85.43 on Gate.io.

Yet, on-chain data presents a contrasting picture. According to Artemis, Solana’s network activity in Q1 2026 reached $1.1 trillion in economic activity, up about 29% quarter-over-quarter (from $850 billion in Q4 2025), nearly doubling from $600 billion in Q3 2025. Daily active users increased from 3 million in Q4 2025 to 4.6 million, a 53% rise; new user numbers grew approximately 78% quarter-over-quarter to 3.2 million. Total on-chain transactions reached 25.3 billion.

The key difference between Solana and Ethereum is that Solana’s high-throughput architecture is more suited for high-frequency decentralized applications, and the decoupling between on-chain activity and price more often reflects shifts in market narratives and token valuation stages. Fidelity notes that Solana’s network demand remains robust, indicating that the underlying protocol layer demand has not weakened.

What Conditions Are Needed for Market Consolidation to Lead to Structural Repair, Given Capital Concentration in BTC?

According to Fidelity’s Q2 report, the core contradiction in the current crypto market is that Bitcoin, as a liquidity reservoir, plays a stabilizing role, while Ethereum and Solana face re-pricing pressures due to valuation and fundamentals decoupling. The market is still in a repair phase, but positive structural evolution is underway, and these changes are not yet fully reflected in current prices.

Market structure recovery requires two conditions: first, Bitcoin’s market share and unrealized profit levels remain stable, forming the foundation for the overall valuation system; second, in a price-pressure environment, on-chain activity for Ethereum and Solana must continue to grow, demonstrating fundamental support for valuation recovery. Fidelity’s perspective essentially offers a more resilient analytical framework by cross-examining “protocol layer demand” and “price volatility.”

How Does Fidelity’s Conclusion Influence Current Market Consensus?

Fidelity’s core conclusion is not that the market has bottomed or that a bull run is imminent, but rather that early stabilization signals are emerging from underlying data. Before the report’s release, Jurrien Timmer, Fidelity’s global macro strategist, expressed optimism about Bitcoin, expecting a rebound from the $60,000 low and a new base around $78,000. As of April 28, 2026, data from Gate.io showed Bitcoin at approximately $76,895, oscillating around that range.

For market participants, the value of Fidelity’s report lies not in directional “calls” but in providing a logical framework to verify market cycles—by monitoring metrics such as unrealized profits, network activity, and capital rotation—to assess whether a bottom is truly forming. When price signals are noisy, on-chain data often offers more definitive insights.

Summary

Fidelity Digital Assets’ Q2 2026 Signal Report, through systematic analysis of Bitcoin’s NUPL indicator, Yardstick valuation model, capital flow trends, and on-chain activity versus price performance of Ethereum and Solana, sketches the current fundamental landscape of the crypto market. Bitcoin demonstrates relative resilience as a market anchor, with multiple indicators signaling early stabilization, creating conditions for a more stable market structure; despite deep price corrections, Ethereum and Solana’s on-chain demand remains strong, driven by L2 expansion and decentralized application ecosystems. The divergence between price and activity reveals that protocol-layer fundamentals are not yet fully priced in. The market remains in consolidation and repair, but marginal improvements in underlying data warrant ongoing attention.

FAQ

What is the core insight of Fidelity’s Signal Report?

The report’s core insight is that although the crypto market is in a consolidation phase, multiple on-chain indicators already show early stabilization signals, and Bitcoin is creating conditions for structural repair.

What level is Bitcoin’s NUPL indicator at according to the report?

Bitcoin’s NUPL score is 0.21, in the “Hope-Fear” zone, indicating a market state where investor profit buffers are thin and overall valuation remains cautious.

What does the divergence between on-chain activity and price for Ethereum and Solana imply?

In Q1 2026, Ethereum processed over 200 million on-chain transactions, reaching a quarterly high, while Solana’s network activity in the same period hit $1.1 trillion. Yet, both ETH and SOL prices experienced significant declines, forming a divergence pattern of “growing on-chain usage but not yet fully reflected in price.”

How should we interpret the statement that “protocol layer demand has not yet weakened”?

This indicates that the real usage scenarios—Layer 2 transactions, stablecoin transfers, decentralized application interactions—are still growing, meaning that despite token price corrections, the network activity remains robust and supports ongoing demand.