Author: Tiger Research
Compiled by AididiaoJP, Foresight News
Key Points
The macro environment remains supportive, although the pace has slowed somewhat: global M2 reached a record high of 13.44 trillion US dollars, and Bitcoin ETF inflows turned positive for the first time in 14 months. However, the oil shock triggered by the Iran conflict pushed March CPI to 3.3%, narrowing the Federal Reserve's rate-cutting path.
$Bitcoin (BTC.CC)$ On-chain indicators are transitioning from undervaluation to early equilibrium: key on-chain metrics have exited the panic zone of the first quarter. The current price is $70,500, approximately 13% lower than the average entry cost of long-term holders at $78,000. A breakout above this level would serve as a major signal of short-term trend reversal.
The target price of 143,000 US dollars and upside potential of 2x remain valid: based on a neutral benchmark of 132,500 US dollars, adjusted by -10% for fundamentals and +20% for macro factors. Although the target has been reduced from 185,500 US dollars in the first quarter, the significant pullback in spot prices implies that the actual upside potential from current levels has expanded instead.
Macroeconomic tailwinds persist, but momentum has slowed
Since the release of the Q1 report, Bitcoin has fallen by approximately 27%, with the average price in early April hovering around 70,500 US dollars. The Iran conflict introduced a new variable, but the overall macro environment remains favorable. What has changed is not the direction but the speed.
Liquidity reaches record highs but fails to effectively translate into Bitcoin gains
As of February 2026, global M2 continues to expand to near a record high of 13.44 trillion US dollars. However, Bitcoin has fallen by 27% since the first quarter. Liquidity and price are showing divergent movements.
The source of liquidity explains this divergence. Over the past year, more than 60% of M2 growth across the four major economies (China, the United States, the Eurozone, and Japan) came from China, driven by the People's Bank of China’s reserve requirement ratio cuts and an official shift to an easing stance in Q1.
The contribution from the United States was only 10%. The issue lies in the limited channels through which liquidity originating from China can enter the Bitcoin market. Domestic restrictions on cryptocurrency trading remain in place, and indirect channels via Hong Kong and Singapore primarily serve institutional funds. While global liquidity is at a historical peak, the share that can actually reach the Bitcoin market is shrinking.
Iran Conflict Slows Down the Federal Reserve's Rate-Cut Pace
Due to the blocked liquidity transmission from China, dollar liquidity remains the primary driver of Bitcoin. However, even this aspect has been delayed as a result of the Iran conflict.
Following the U.S.-Israel strike on Iran on February 28, the Strait of Hormuz was blockaded. Brent crude oil surged to $118 per barrel in mid-March, with Dubai crude hitting a record high of $166 per barrel. This shock directly pushed inflation higher. The U.S. CPI in March rose from 2.4% in February to 3.3%, marking a two-year high. The Federal Reserve’s room for rate cuts subsequently narrowed. The March dot plot reduced the expected number of rate cuts for 2026 to just one.
Nevertheless, the direction of easing has not changed. In mid-April, the Strait of Hormuz was partially reopened, and oil prices retreated sharply to around $90. Core CPI stabilized at 2.6%, indicating that the shock had not yet spread comprehensively across the broader economy. President Trump formally nominated Kevin Warsh as the next Federal Reserve Chair at the end of January, and Senate confirmation hearings are underway. With Powell’s term ending on May 15, the inclination toward easing is likely to continue. While the number of rate cuts may decrease, the direction remains unchanged.
Institutional fund flows have begun to reverse
The institutional outflows that drove the decline in the first quarter have started to reverse. Bitcoin spot ETFs recorded their worst monthly outflow since their launch in November 2025 and remained in net outflow for five consecutive months. However, since March, monthly net inflows have turned positive. By mid-April, cumulative fund flows for the year turned positive, with total assets under management rebounding to $96.5 billion.
Corporate accumulation of Bitcoin is also accelerating. Strategy spent $2.54 billion to purchase 34,164 Bitcoin in a single week (April 13-19), increasing its 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 fund flows returning to normal, and progress on the U.S. CLARITY Act. Recent headwinds—oil shocks triggered by Iran and the Federal Reserve’s slower pace of rate cuts—have partially offset these positives. Macro indicators for the second quarter were adjusted downward by 5 percentage points compared to the first quarter, revised to +20%.
Shifting from undervaluation to early equilibrium
On-chain metrics have moved out of the extreme fear zone and are transitioning towards the boundary between undervaluation and equilibrium. Key indicators such as MVRV-Z, NUPL, and aSOPR have exited the fear region observed in the first quarter and entered an early recovery phase. While a sharp rebound typical of fear zones is unlikely, historical data shows that the average one-year return from this zone has consistently remained in double digits. The risk-reward ratio at this point remains highly favorable.
Notably, the average cost basis for short-term holders (STH) is gradually declining. This indicates that speculative capital is withdrawing, while new buyers are accumulating at lower price levels. The timing aligns with the resumption of net inflows into ETFs and Strategy’s large-scale purchases, supporting the view that institutional investors are steadily accumulating at discounted levels, thereby lowering the average entry cost.
The critical risk level is at $54,000, representing the network-wide average cost basis. A drop below this level would place the entire network in an unrealized loss state, potentially forming an extreme scenario bottom. The strongest resistance level lies at $78,000, coinciding with the average entry cost of long-term holders.
The current price of $70,500 is approximately 13% lower than this resistance level, leaving a significant portion of recent short-term capital in an unrealized loss position. A decisive breakout above $78,000 in the short term warrants close attention.
Surface growth, underlying stagnation
In the first half of April, Bitcoin's daily average transaction volume reached 564,000, reflecting a year-on-year increase of 37.9%. While surface-level data appears impressive, the details tell a different story.
During the same period, the number of active addresses fell to 428,000, marking a year-on-year decrease of 13.2% and a month-on-month decline of 4.2%. The average transfer size per transaction dropped to 1.19 BTC, down 34.1% from 1.80 BTC in the previous quarter. While the number of transactions increased, both participant numbers and individual transaction values declined. This pattern reflects small-scale transfers repeatedly conducted by a limited number of users rather than widespread economic utilization of the network. A significant portion of the transaction volume growth likely stems from mechanical flows such as exchange deposits, unrelated to genuine expansion.
The Q1 report maintained fundamental indicators at 0%, based on expectations of BTCCFi ecosystem expansion. Entering Q2, this thesis has significantly weakened. According to The Block’s '2026 Digital Asset Outlook,' Bitcoin Layer 2 Total Value Locked (TVL) has fallen by 74% year-to-date, while total BTCCFi TVL dropped by 10%, now accounting for only 0.46% of Bitcoin’s total supply (91,332 BTC). Although individual protocols like Babylon and Lombard have shown growth, the overall ecosystem has contracted.
Fundamental indicators adjusted downward to -10%
Surface-level growth has failed to translate into real network expansion, with underlying data supporting the BTCCFi thesis showing signs of weakening. The balance between positive and negative signals observed in Q1 has been disrupted. In Q2, fundamental indicators were revised downward from 0% to a baseline of -10%.
Target price of 143,000 USD still has a 2x upside potential.
Using the TVM method, the neutral benchmark calculated based on the average price in early April 2026 is 132,500 USD. After incorporating a -10% adjustment for fundamentals and a +20% adjustment for macro factors, the 12-month target price is set at 143,000 USD.
This figure is approximately 23% lower than the Q1 target of 185,500 USD. However, the actual upside potential has expanded. Calculated based on the average price, the upside potential increased from +93% in Q1 to +103% in Q2.
The downward revision of the target price does not indicate pessimism. The macro direction and on-chain structure continue to support the mid-to-long-term bull market logic.
Three short-term observation points:
A decisive breakthrough above the mid-term equilibrium level of 78,000 USD for the entire network;
Continuous net inflow into ETFs;
A shift in Fed policy following the easing of geopolitical risks.
If these three conditions are simultaneously met, the target of 143,000 USD remains achievable.
Editor/Joe