- Fidelity said Bitcoin is approaching long-term support, with its power law model identifying $56,500 as a possible downside target.
- The firm noted current market conditions resemble past accumulation phases following major Bitcoin bear markets.
- Fidelity said institutional demand remains mixed despite recent spot Bitcoin ETF inflows ending an eight-week withdrawal streak.
Fidelity Investments believes Bitcoin may be entering an accumulation phase despite ongoing market weakness. Jurrien Timmer, Fidelity’s director of global macro, said the cryptocurrency is approaching a key support level, while the firm’s power law model identifies about $56,500 as a possible downside target if another pullback occurs.
Fidelity Points to Historical Support
According to Timmer, Bitcoin has moved closer to its long-term power law support after falling toward the $60,000 range. He said the current setup resembles previous accumulation periods that followed major market declines.
Fidelity’s model shows Bitcoin trading about 56% below its median power law trend. According to the research, similar deviations appeared during the 2018 and 2022 bear markets. The report also noted that Bitcoin’s 52-week Bitcoin-to-gold Z-score has dropped near negative 100%.
Historically, comparable readings coincided with periods of market exhaustion. However, Timmer stopped short of calling a definitive market bottom. Instead, he said another decline toward approximately $56,500 remains possible before prices stabilize.
Macro Conditions Remain a Challenge
While the technical model identifies long-term support, Fidelity noted that broader market conditions remain challenging. According to Timmer, slower global money supply growth has reduced speculative demand for Bitcoin.
He also said capital previously invested in Bitcoin rotated into gold before shifting toward semiconductor stocks. As a result, Bitcoin currently lacks a clear catalyst for a sustained recovery.
Meanwhile, Fidelity’s analysis stated that higher bond yields and expectations for delayed interest rate cuts continue weighing on risk assets.
ETF Flows Show Mixed Picture
Alongside the technical outlook, institutional fund flows presented mixed signals. U.S. spot Bitcoin exchange-traded funds recorded net inflows of $197.4 million during the latest week, ending an eight-week streak of withdrawals.
BlackRock’s iShares Bitcoin Trust attracted most of the new capital. However, the Fidelity Wise Origin Bitcoin Fund, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF each reported net outflows.
According to the analysis, Bitcoin remains near a historically significant support area. However, Fidelity indicated that sustained demand, rather than technical levels alone, will determine the next market direction.
