Exploring Bitcoin’s Valuation in 2026 from Macro and On-Chain Structural Perspectives
TechFlow Selected TechFlow Selected
Exploring Bitcoin’s Valuation in 2026 from Macro and On-Chain Structural Perspectives
Bitcoin’s Q2 valuation revised down to $143,000, still offering 2x upside potential: shifting from oversold to early equilibrium.
Navigating Web3 tides with focused insightsAuthor: Tiger Research
Translation & Editing: AididiaoJP, Foresight News
Key Takeaways
The macro environment remains supportive, albeit at a slower pace: Global M2 has hit a record high of $13.44 trillion, and Bitcoin ETF flows turned net 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 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 observed in Q1. At the current price of $70,500—approximately 13% below the long-term holders’ average entry cost of $78,000—a decisive breakout above this level would signal a short-term trend reversal.
A $143,000 target price—and thus ~2x upside—remains valid: Based on a neutral benchmark of $132,500, adjusted by -10% for fundamentals and +20% for macro factors. Though lower than Q1’s $185,500 target, the sharp correction in spot price means the actual upside from current levels has widened.
Macro Tailwinds Persist—but Momentum Has Slowed
Since the Q1 report was published, Bitcoin has declined roughly 27%, with its early-April average hovering near $70,500. The Iran conflict introduced a new variable, yet the overall macro backdrop remains favorable. What has changed is not direction—but speed.
Liquidity at Record Highs—but Fails to Transmit Effectively to Bitcoin
As of February 2026, global M2 continues expanding to a record-high $13.44 trillion. Yet Bitcoin has fallen 27% since Q1—indicating an inverse relationship between liquidity and price.
The source of liquidity explains this divergence. Over the past year, more than 60% of M2 growth across the four largest economies (China, the U.S., the Eurozone, and Japan) originated in China—driven by the People’s Bank of China’s reserve requirement cuts and its formal pivot to accommodative policy in Q1.
The U.S. contributed only 10%. The issue lies in limited transmission channels: Domestic crypto trading restrictions remain in place, while indirect routes via Hong Kong and Singapore primarily serve institutional capital. Global liquidity is at a historic peak—but the share actually reaching the Bitcoin market is shrinking.
Iran Conflict Delays Fed Rate Cuts
With Chinese-sourced liquidity transmission constrained, U.S. dollar liquidity remains Bitcoin’s primary driver—yet even this channel has been delayed by the Iran conflict.
Following the U.S.-Israeli strike on Iran on February 28, the Strait of Hormuz was blocked. Brent crude surged to $118/barrel in mid-March, while Dubai crude hit a record high of $166/barrel. This shock directly lifted inflation: U.S. March CPI rose to 3.3% from 2.4% in February—the highest in two years—narrowing the Fed’s room for rate cuts. The March dot plot reduced 2026 rate-cut expectations to just one.
Nonetheless, the accommodative direction remains unchanged. By mid-April, the Strait of Hormuz partially reopened, and oil prices dropped sharply to ~$90/barrel. Core CPI stabilized at 2.6%, suggesting the shock has not yet broadly spilled over into the broader economy. On January 31, President Trump formally nominated Kevin Warsh as the next Fed Chair; Senate confirmation hearings are underway. Powell’s term ends on May 15, and a dovish stance is highly likely to persist. Though the number of cuts may shrink, the direction remains intact.
Institutional Flows Begin Reversing
The institutional outflows that drove Q1’s decline have begun reversing. Bitcoin spot ETFs recorded their worst monthly outflow since launch in November 2025—and remained in net outflow for five consecutive months. Since March, however, monthly net flows have turned positive. As of mid-April, year-to-date cumulative flows have turned positive, and total AUM has rebounded to $96.5 billion.
Corporate accumulation is also accelerating. Strategy spent $2.54 billion in a single week (April 13–19) to acquire 34,164 BTC, bringing its total holdings to 815,061 BTC. However, the number of companies participating in this trend has not meaningfully increased.
Macro Indicator Adjusted Down to +20%
Structural tailwinds remain intact: liquidity expansion, policy easing bias, institutional flows returning to positive territory, and progress on the U.S. CLARITY Act. Recent headwinds—including the oil shock triggered by Iran and the Fed’s delayed easing—partially offset these positives. Thus, the Q2 macro indicator is lowered by 5 percentage points to +20%.
From Undervaluation Toward Early Equilibrium
On-chain indicators have exited the extreme panic zone and are transitioning toward the boundary between undervaluation and equilibrium. Key metrics—including MVRV-Z, NUPL, and aSOPR—have moved out of Q1’s panic zone and entered an early recovery phase. While a sharp rally akin to panic-zone rebounds is unlikely, historical data shows annualized returns from this zone consistently remain in double digits. Risk-reward remains most favorable here.
Notably, the average cost basis of short-term holders (STH) is gradually declining—suggesting speculative capital is exiting while new buyers accumulate at lower prices. This timing aligns with the resumption of ETF net inflows and Strategy’s large-scale purchases, supporting the view that institutional investors are persistently accumulating in the discount zone, thereby lowering the network’s average entry cost.
The key risk level stands at $54,000—the network-wide average cost basis. A break below this level would push the entire network into unrealized loss territory, marking a potential bottom under extreme conditions. The strongest resistance lies at $78,000—coinciding with long-term holders’ average entry cost.
At the current price of $70,500—~13% below this resistance—much of the recently acquired short-term capital sits in unrealized loss. A decisive breakout above $78,000 warrants close attention in the near term.
Surface Growth, Underlying Stagnation
In early April, Bitcoin’s daily transaction count averaged 564,000—up 37.9% year-on-year. Surface-level data looks strong—but details tell another story.
Meanwhile, active addresses fell to 428,000—down 13.2% YoY and 4.2% QoQ. Average transaction size dropped to 1.19 BTC—down 34.1% from last quarter’s 1.80 BTC. Transaction count rose, but both participant numbers and per-transaction value declined. This pattern reflects repeated small-value transfers by a narrow set of users—not broad-based economic adoption. Much of the volume growth likely stems from mechanical flows like exchange deposits—unrelated to genuine organic growth.
The Q1 report held fundamentals steady at 0%, based on anticipated BTCFi ecosystem expansion. Entering Q2, this thesis has clearly weakened. Per The Block’s “2026 Digital Asset Outlook,” Bitcoin L2 TVL has fallen 74% YTD, and total BTCFi TVL has declined 10%—now representing just 0.46% (91,332 BTC) of Bitcoin’s total supply. Though individual protocols such as Babylon and Lombard show growth, the broader ecosystem is contracting.
Fundamentals Indicator Adjusted Down to -10%
Surface growth has failed to translate into real network expansion, and underlying data supporting the BTCFi narrative has weakened. The balanced mix of bullish and bearish signals seen in Q1 has broken down. Thus, the Q2 fundamentals indicator is lowered from 0% to -10%.
$143,000 Target Price—Still ~2x Upside
Using the TVM methodology, the neutral benchmark—based on the early-April 2026 average price—is $132,500. Adjusting for fundamentals (-10%) and macro (+20%), the 12-month target price is set at $143,000.
This figure is ~23% lower than Q1’s $185,500 target. Yet actual upside potential has expanded: Measured from the average price, upside has widened from +93% in Q1 to +103% in Q2.
The downward revision does not reflect pessimism. Macro direction and on-chain structure continue to support the medium- to long-term bull thesis.
Three short-term watchpoints:
- A decisive breakout above the network-wide intermediate equilibrium level of $78,000;
- Sustained net inflows into Bitcoin ETFs;
- A Fed policy pivot following de-escalation of geopolitical risks.
If all three conditions materialize simultaneously, the $143,000 target remains achievable.
Join TechFlow official community to stay tuned
Telegram:https://t.me/TechFlowDaily
X (Twitter):https://x.com/TechFlowPost
X (Twitter) EN:https://x.com/BlockFlow_News
@tiger_research
