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Fidelity Digital Assets Research’s Q2 2026 Signals Report shows all three major assets carrying negative momentum and deep YTD losses.
But beneath the price declines, on-chain metrics for Ethereum and Solana are hitting multi-year highs, Bitcoin’s valuation indicator is flashing a historically constructive setup, and external researchers are reaching strikingly similar conclusions through different frameworks.
Prices may be moving sideways, but network activity isn’t. Ethereum processed $18T in stablecoin volume over the past year—an all-time high. What else is happening beneath the surface?
Explore the signals across BTC, ETH, and SOL in our Q2 2026 Signals… pic.twitter.com/HFNwkGBzDZ
— Fidelity Digital Assets (@DigitalAssets) May 5, 2026
The headline numbers from Fidelity Digital Assets Research’s Q2 2026 Signals Report are blunt. Bitcoin is down 25% year to date and approximately 39% from its October 2025 all-time high above $126,000. Ethereum is down 31% year to date and 47% from its October peak near $3,850. Solana is the worst performer of the three, down 38% year to date and 57% since its momentum signal turned negative on October 28, 2025, when SOL traded near $194.
Two forced liquidation events delivered the sharpest single-day damage: $2.56 billion on January 30 and $2.13 billion on February 4, both of which reset derivatives markets and accelerated the derisking across growth-oriented portfolios that Fidelity and Grayscale Research have each independently cited as the dominant driver of the drawdown.
Spot ETP flows are net negative year to date, and Kevin Warsh’s nomination as Federal Reserve Chair shifted market expectations toward zero rate cuts in 2026, removing the monetary tailwind that had supported risk assets through late 2025.
Bitcoin’s NUPL score closed Q1 2026 at 0.21, placing the market in the Hope-Fear zone. That reading is not bullish at the moment, but Fidelity’s historical analysis of 57 prior observations at this NUPL level shows a median one-year return of 63% and a three-year compound annual growth rate of 74%. The three-year correlation between NUPL score and forward returns sits at negative 0.81, the strongest inverse relationship in the framework, meaning lower readings have historically preceded stronger long-term performance.
The Yardstick, Fidelity’s hash-rate-adjusted valuation metric analogous to a price-to-earnings ratio, is positive. 79% of the past 91 days placed Bitcoin in its undervalued zone, a condition that has historically coincided with accumulation phases. In prior cycles the undervalued zone lasted 298 days in 2018 and 299 days in 2022 before sentiment recovered. This bear market has run 111 days to that threshold as of Q1’s close, suggesting October 2026 as a key cyclical timeframe.
CryptoQuant analyst Darkfost reached the same accumulation conclusion through a different lens: his onchain analysis of large-wallet behaviour showed Bitcoin addresses holding more than 1,000 BTC added a net 45,000 coins between January and March 2026, the fastest pace of whale accumulation since the $16,000 lows of November 2022.
Ethereum’s NUPL closed Q1 at negative 0.12, deep in the capitulation zone. Fidelity rates that signal as positive because at this reading, 30 prior historical observations since 2018 show a median one-year return of 81% and a three-year CAGR of 42%. The more striking data, however, is what is happening to Ethereum’s network while its token price is down 31%. Daily transactions exceeded two million, a 34% quarter-over-quarter increase.
Monthly active addresses rose 34% and monthly new addresses rose 18%, both surpassing the previous highs set during the peak of the 2021 bull market. Stablecoin transfer value hit an all-time high over the trailing 12 months, surpassing $18 trillion. The 30-day average transfer value rose 24% from $59.2 billion to $73.4 billion. Transfer costs remained below $1 for two consecutive quarters.
That combination of record activity alongside falling prices directly contradicts the bear market narrative that ETH’s utility is eroding. Coinbase’s Base network, Arbitrum, and Optimism each hit transaction volume records in Q1 2026, with Base alone processing over 100 million transactions in February.
Ethereum’s developer community has been explicit about prioritizing throughput over fee revenue at this stage of the technology cycle, a position Fidelity acknowledges creates a structural negative on fee income that traditional valuation frameworks will penalize even as user adoption accelerates.
SCOPE: Ethereum L2s won the usage war but L1 Is losing the value
L2s now hold ~$46.8B in TVL and over half of all crypto liquidity. Fees are no longer the bottleneck.
Yet since Dencun, L1 blob revenue has struggled to stay above even $1M per day.
The Ethereum stack is scaling… pic.twitter.com/Xa938g4p9L
— DeFi Scope (@DefiScope) May 4, 2026
Solana’s NUPL hit negative 0.94 in early February 2026, the deepest capitulation reading in the asset’s history, before recovering 29% to negative 0.67 by Q1’s close. At this reading, Fidelity’s historical analysis of 10 observations shows a median one-year return of 516%, though the firm explicitly flags the small sample size and Solana’s short network history as limitations on that figure’s reliability. The momentum signal turned negative on October 28, 2025, when SOL traded near $194, and has not recovered. SOL traded in a range between $78 and $96 for most of Q1 2026.
What has not followed the price lower is network usage. Monthly active addresses rose 50% in Q1 and new addresses rose 35%, both reaching their highest levels since 2021. Stablecoin transfer volume consistently exceeded $5 billion per month with a 30-day average of $7.2 billion, up 8% on the quarter. The data matters because Solana’s fee income peaked during the memecoin mania of late 2024 and early 2025. Rolling annual fees have been falling since.
The question Fidelity poses directly is whether the stablecoin and payments activity now growing on Solana can build a sustainable fee base once the memecoin revenue floor has been established. Visa’s decision in April to add Solana-linked Jupiter’s JupUSD to its stablecoin settlement pilot is the clearest external signal that institutional payment infrastructure is actively choosing Solana as a settlement layer rather than simply tolerating it as a trading venue.
Fidelity’s weighted NUPL score, which aggregates unrealized profitability across a market-cap-weighted digital asset portfolio, is currently supported almost entirely by Bitcoin. Ethereum and Solana are both sitting in negative NUPL territory, meaning losses still prevail among the holders of those assets.
The firm describes this as a repair phase rather than a late-cycle environment, with strength narrowly concentrated in the most liquid asset and the broader complex still stabilizing. BTC dominance has been rising since H2 2025 and continues climbing through Q2 2026, consistent with prior periods of capital consolidation during uncertainty.
10x Research founder Markus Thielen reached a structurally similar conclusion through his April 27 weekly report, describing Bitcoin’s approach to $80,000 as a low-conviction rally driven by spot buying and short covering in a low-funding, low-volume environment.
Galaxy Digital’s Alex Thorn, in his April 23 research note, put 50% odds on the CLARITY Act passing before Memorial Day, the same legislative catalyst that Fidelity cited as one of three macro triggers, alongside geopolitical de-escalation and Fed policy clarity, that would be required to shift the market out of its current selective capital deployment mode and into a sustained expansion phase.
Until at least one of those three arrives, the signals Fidelity is reading suggest the rebuilding continues below the surface while the price chart stays stuck.
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