Exploring Bitcoin Valuation in 2026 from Macro and On-Chain Structural Perspectives

Original Author: Tiger Research

Original Compilation: AididiaoJP, Foresight News

Key Takeaways

The macro environment remains supportive, albeit at a slower pace: Global M2 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.

Bitcoin on-chain metrics are shifting from undervaluation to early equilibrium: Key on-chain indicators have moved out of the panic zone of Q1. The current price of $70.5k is about 13% below the long-term holder average cost basis of $78k. Breaking above this level would be a major signal for a short-term trend reversal.

The $143k price target and 2x upside potential remain valid: Based on a neutral baseline of $132.5k, adjusted with -10% for fundamentals and +20% for macro factors. This is lower than the Q1 target of $185.5k, but the significant spot price correction means the actual upside from current levels has actually expanded.

Macro Tailwinds Persist, But Momentum Has Slowed

Since the release of the Q1 report, Bitcoin has fallen by approximately 27%, with the average price hovering around $70.5k in early April. The Iran conflict introduced a new variable, but the overall macro environment remains favorable. What changed is not the direction, but the speed.

Liquidity at Record Highs, But Failing to Effectively Transmit to Bitcoin

As of February 2026, global M2 continued to expand to a near-record high of nearly $13.44 trillion. Yet, Bitcoin is down 27% from Q1. Liquidity and price are moving in opposite directions.

The source of liquidity explains this divergence. Of the M2 growth from the four major economies (China, US, Eurozone, Japan) over the past year, over 60% came from China, driven by the PBOC's RRR cuts and its formal shift to an easing stance in Q1.

The US contribution was only 10%. The issue is that channels for China-sourced liquidity to enter the Bitcoin market are limited. Domestic crypto trading restrictions remain, while indirect channels via Hong Kong and Singapore primarily serve institutional capital. Global liquidity is at historic peaks, but the share that can actually reach the Bitcoin market is shrinking.

Iran Conflict Slows Fed Rate Cut Pace

With the transmission of China-sourced liquidity blocked, dollar liquidity remains the primary driver for Bitcoin. But even this part has been delayed by the Iran conflict.

Following the US-Israel strike on Iran on February 28th, the Strait of Hormuz was blocked. Brent crude surged to $118/barrel in mid-March, and Dubai crude hit a record high of $166/barrel. This shock directly pushed inflation higher. US March CPI rose to 3.3% from 2.4% in February, a two-year high. The Fed's room for rate cuts subsequently narrowed. The March dot plot reduced 2026 rate cut expectations to just one.

Nevertheless, the easing direction remains unchanged. By mid-April, the Strait of Hormuz partially reopened, and oil prices retreated significantly to around $90. Core CPI stabilized at 2.6%, indicating the shock had not yet broadly diffused through the economy. President Trump formally nominated Kevin Warsh as the next Fed Chair at the end of January, with Senate confirmation hearings ongoing. Powell's term ends on May 15th, and an easing bias is highly likely to continue. The number of cuts may be reduced, but the direction remains.

Institutional Flows Begin to Reverse

The institutional outflows that drove the Q1 decline have begun to reverse. Bitcoin spot ETFs recorded their worst monthly outflows since their November 2025 launch and were in net outflows for five consecutive months. However, since March, monthly net inflows have turned positive. As of mid-April, cumulative year-to-date flows turned positive, with total AUM recovering to $96.5 billion.

Corporate accumulation is also accelerating. Strategy spent $2.54 billion to buy 34,164 BTC 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 increased significantly.

Macro Indicator Adjusted Down to +20%

Structural tailwinds remain intact: liquidity expansion, policy easing bias, institutional flows back on track, and progress on the US CLARITY Act. Recent headwinds—the Iran-induced oil shock and slower Fed cuts—partially offset these positives. The Q2 macro indicator is adjusted down by 5 percentage points from Q1 to +20%.

From Undervaluation to Early Equilibrium

On-chain metrics have moved out of extreme panic zones and are transitioning towards the boundary between undervaluation and equilibrium. Key indicators like MVRV-Z, NUPL, and aSOPR have exited the Q1 panic zone and entered an early recovery phase. While a sharp rally like those seen from panic-zone rebounds is less likely, historical data shows that one-year average returns starting from this region consistently remain in double digits. The risk-reward ratio here is still at its most favorable.

Notably, the average cost basis for Short-Term Holders (STH) is gradually declining. This suggests speculative capital is exiting, while new buyers are accumulating at lower prices. The timing aligns with the restart of ETF net inflows and Strategy's large-scale purchases, supporting the view that institutional investors are continuously accumulating in discounted ranges, thereby lowering the average entry cost.

The key risk level is $54k, which is the network-wide average cost basis. Falling below this would put the entire network into an unrealized loss state, forming a bottom in extreme scenarios. The strongest resistance is at $78k, coinciding with the long-term holder average cost basis.

The current price of $70.5k is about 13% below this resistance level, with a significant amount of recent short-term capital in unrealized loss. A decisive break above $78k in the short term warrants close attention.

Superficial Growth, Underlying Stagnation

Bitcoin's average daily transaction count reached 564,000 in the first half of April, up 37.9% year-over-year. The surface data looks impressive, but the details tell another story.

Active addresses during the same period fell to 428,000, down 13.2% year-over-year and 4.2% month-over-month. The average transfer size per transaction dropped to 1.19 BTC, down 34.1% from 1.80 BTC last quarter. Transaction counts are rising, but both participants and value per transaction are declining. This pattern reflects a small number of users repeatedly making small transfers, rather than broad economic utilization of the network. A significant portion of the transaction growth likely comes from mechanical flows like exchange deposits, unrelated to real growth.

The Q1 report kept the fundamental indicator at 0%, based on expectations for BTCFi ecosystem expansion. Entering Q2, this thesis has clearly weakened. According to The Block's "2026 Digital Asset Outlook," Bitcoin L2 TVL has fallen 74% year-to-date, total BTCFi TVL is down 10%, accounting for only 0.46% of total Bitcoin supply (91,332 BTC). While individual protocols like Babylon and Lombard have seen growth, the overall ecosystem has contracted.

Fundamental Indicator Adjusted Down to -10%

Superficial growth has failed to translate into real network expansion, and the underlying data supporting the BTCFi thesis has weakened. The balance of offsetting positive and negative signals seen in Q1 has been broken. The Q2 fundamental indicator is adjusted down from 0% to a baseline of -10%.

Price Target $143k, Still 2x Upside Potential

Using the TVM method, the neutral baseline calculated from the average price in early April 2026 is $132.5k. After applying the -10% fundamental and +20% macro adjustments, the 12-month price target is set at $143k.

This figure is about 23% lower than the Q1 target of $185.5k. However, the actual upside potential has instead expanded. Calculated from the average price, the upside has grown from +93% in Q1 to +103% in Q2.

The lower target price does not represent pessimism. The macro direction and on-chain structure still support a medium-to-long-term bull thesis.

Three short-term observation points:

• Decisive break above the network-wide mid-term equilibrium level of $78k;
• Sustained net inflows into ETFs;
• Fed policy pivot after geopolitical risks ease.

If these three conditions materialize simultaneously, the $143k target remains achievable.