Main Points:
- Fidelity’s “Bitcoin Yardstick” indicates BTC is entering an undervalued zone
- Network security strength vs. market cap shows calmer conditions in Q1 2025
- Long-term holders are accumulating, illiquid supply rising above 63%
- BlackRock’s IBIT ETF saw its second-largest single-day inflow on April 28, 2025
- U.S. JOLTS data cooling labor market fuels dovish Fed rate-cut expectations
- Alex Krüger highlights Bitcoin’s hybrid risk-asset appeal ahead of the next FOMC meeting
Undervalued by Its Own Measures: The Bitcoin Yardstick
Fidelity Digital Assets has popularized a metric known as the Bitcoin Yardstick, calculated as the ratio of Bitcoin’s market capitalization to its network hash rate. A lower value implies that, relative to the network’s energy-security foundation, the market price is “undervalued.” In the first quarter of 2025, this indicator spent most days within –1 to +3 standard deviations—an appreciable cooling from Q4 2024’s overheated readings. Notably, days above two standard deviations dropped from 22 to 15, and none spiked above three, signaling that today’s prices may not fully reflect the underlying network security. In practical terms, investors get more “security per dollar” than they did late last year, suggesting potential upside as markets re-price this metric.
Bitcoin’s Acceleration Phase: Rally Potential vs. Blow-off Risks
While Fidelity’s analysis finds Bitcoin in an “acceleration phase”, where breakouts to new highs have become increasingly common, it also cautions against complacency. Acceleration phases often precede sharp corrections or blow-off tops, especially when speculative fervor outpaces structural fundamentals. Traders and long-term holders alike should balance enthusiasm for new highs with vigilance for signs of a rapid unwind—such as sudden volume spikes or diverging momentum indicators on major exchanges.
Supply Dynamics: Long-Term Holders Take the Helm
Another striking trend is the growth in illiquid supply—coins that haven’t moved on-chain for months—rising from 61.50% to 63.49%. Conversely, liquid supply dropped by approximately 4%. This suggests a growing cohort of investors shifting into long-term holding behavior, reducing the readily tradable float. Historically, rising illiquid supply correlates with tightening available sell-pressure, which can amplify price moves during bullish phases. However, should sentiment sour, a sudden release of parked coins could exacerbate downward moves.
ETF Inflows Spotlight Institutional Confidence
On April 28, 2025, BlackRock’s iShares Bitcoin Trust (IBIT) recorded approximately $970.9 million in net inflows—its second-largest single-day intake since launching in January 2024. Over the past week (since April 22), IBIT amassed more than $4.5 billion in cumulative inflows, in stark contrast to outflows seen in competing products like Fidelity’s FBTC and ARK’s ARKB. With assets under management now exceeding $54 billion, IBIT commands roughly 51% of the U.S. spot-Bitcoin ETF landscape, underscoring growing institutional conviction.
U.S. Labor Market Cool-Down: A Tailwind for Risk Assets
The U.S. Job Openings and Labor Turnover Survey (JOLTS) released in March 2025 showed job vacancies declining from 7.57 million in February to 7.19 million, missing expectations of 7.48 million. This moderation in labor demand bolsters the case for imminent Federal Reserve rate cuts, weakening the dollar and driving capital toward higher-beta assets like Bitcoin. Conversely, unexpectedly strong JOLTS data could delay easing, applying downward pressure on crypto prices. With federal layoffs at 2020-high levels, the market lean is modestly dovish, supporting risk-asset rallies.
Expert Commentary: Bitcoin as a Risk-Asset/Gold Hybrid
Economist and Bitcoin advocate Alex Krüger argues that Bitcoin’s unique characteristics—sound monetary policy with capped supply, secure decentralized settlement, and borderless transferability—position it as a “risk-asset and gold hybrid.” In his posts on X (formerly Twitter), Krüger noted that ongoing trade-war tariff reprieves (e.g., the 90-day U.S.–China tariff pause through July 8) further alleviate macro uncertainty. He also flagged the upcoming Federal Open Market Committee (FOMC) meeting as pivotal: markets will parse Chair Powell’s language for hints of accelerated rate-cut timelines. Moreover, as Q2 earnings from industrial bellwethers like Caterpillar and major tech firms roll in, volatility may pick up, but Bitcoin’s risk-return profile could shine relative to overheated altcoin segments.
Emerging Catalysts and Risk Factors
- Geopolitical Easing: Temporary tariff moratoriums and easing Sino-U.S. trade tensions could tilt more capital into cryptocurrencies as alternative hedges against policy uncertainty.
- Macro Volatility Ahead: As growth moderates into Q3, elevated equity market gyrations may boost Bitcoin’s appeal as a portfolio diversifier.
- Altcoin Divergence: Crowded betting on certain altcoins raises the specter of sudden sector rotations; Bitcoin’s market primacy may afford relative stability.
- Regulatory Shifts: Potential changes in U.S. SEC policy toward spot-Bitcoin ETFs or international anti-money-laundering measures could inject fresh volatility.
Conclusion
Bitcoin’s current valuation—when assessed through Fidelity’s “Yardstick”—suggests the market may be underpricing the network’s robust security. Coupled with a growing base of long-term holders and record-breaking institutional inflows into BlackRock’s IBIT ETF, the structural underpinnings appear supportive of further upside. A cooling U.S. labor market fuels dovish Fed expectations, potentially weakening the dollar and providing additional tailwinds. Yet, investors must remain vigilant for blow-off top dynamics and macroeconomic surprises, particularly around the upcoming FOMC meeting and Q2 corporate earnings. Ultimately, Bitcoin’s dual identity as a risk-asset and digital gold positions it uniquely in diversified portfolios—but only those who balance optimism with disciplined risk management will most effectively navigate its next acceleration phase.