Tiger Research: Bitcoin Valuation Downgraded to Q2 2026

Key Takeaways

This report is authored by Tiger Research. The macro environment remains supportive, albeit with a slower pace: Global M2 has reached a new all-time high of $13.44 trillion, and Bitcoin ETF flows have 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 Fed's path for rate cuts.

Bitcoin's on-chain indicators are shifting from undervaluation to early equilibrium: Key on-chain metrics have exited the Q1 panic zone. The current price stands at $70,500, approximately 13% below the average entry price of long-term holders at $78,000. Breaking through this level will be a major signal for a short-term trend reversal.

The target price of $143,000 and the potential for a 2x gain remain valid: Based on a neutral baseline of $132,500, adjusted by a -10% fundamental factor and a +20% macro factor. While lower than the Q1 target of $185,500, the significant price correction means the upside potential from the current price has actually expanded.

Macro tailwinds persist, but momentum has slowed

Since the Q1 report, Bitcoin has fallen approximately 27%, with the average price hovering around $70,500 in early April. The Iran conflict has introduced a new variable, but the overall macro environment remains favorable. What has changed is not the direction, but the speed.

Liquidity at record highs, but not effectively flowing to Bitcoin

As of February 2026, global M2 continued to expand, approaching an all-time high of nearly $13.44 trillion. Yet, Bitcoin has declined 27% from Q1. Liquidity and price are moving in opposite directions.

The source of liquidity explains this divergence. Over the past year, more than 60% of the M2 growth across the four major economies (China, US, Eurozone, Japan) came from China, driven by the People's Bank of China's RRR cuts and its official shift to an accommodative stance in Q1.

The US contributed only 10%. The problem is that liquidity originating from China has limited channels to enter the Bitcoin market. Domestic crypto trading restrictions remain in place, while indirect channels via Hong Kong and Singapore primarily serve institutional capital. Global liquidity is at a historical peak, but the portion that can actually reach the Bitcoin market is shrinking.

Iran conflict slows the Fed's pace of rate cuts

With transmission from China-sourced liquidity hindered, USD liquidity remains the primary driver for Bitcoin. But even this driver is being delayed by the Iran conflict.

Following the US-Israel strikes on Iran on February 28, the Strait of Hormuz was blockaded. Brent crude surged to $118 per barrel in mid-March, and Dubai crude hit an all-time high of $166 per barrel. This shock directly fueled inflation. The US March CPI rose to 3.3% from February's 2.4%, a two-year high. The Fed's room for rate cuts subsequently narrowed. The March dot plot reduced the expectation for 2026 rate cuts to just one.

Nevertheless, the direction of easing has not changed. In mid-April, the Strait of Hormuz partially reopened, causing oil prices to fall sharply back to around $90. Core CPI stabilized at 2.6%, indicating the shock has not fully spread to the broader economy. President Trump formally nominated Kevin Warsh as the next Fed Chair at the end of January, with Senate confirmation hearings underway. Powell's term ends on May 15, and an accommodative stance is likely to persist. The number of rate cuts may decrease, but the direction remains unchanged.

Institutional flows begin to reverse

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

Corporate Bitcoin accumulation is also accelerating. Strategy spent $2.54 billion to purchase 34,164 BTC in a single week (April 13-19), bringing its total holdings to 815,061 BTC. However, the number of companies participating in this trend has not increased significantly.

Macro indicator adjusted 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 the slowing of Fed rate cuts – partially offset these positives. The Q2 macro indicator has been adjusted down by 5 percentage points from Q1 to +20%.

From undervaluation to early equilibrium

On-chain metrics have emerged from the extreme fear zone and are transitioning towards the boundary between undervaluation and equilibrium. Key indicators such as MVRV-Z, NUPL, and aSOPR have left the Q1 panic zone and entered an early recovery phase. While a sharp rally like the rebound from the panic zone is less likely, historical data shows that the one-year average return from this zone consistently remains in the double digits. The risk-reward ratio at this point is still in its most favorable position.

Notably, the average cost basis of 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 consistently accumulating at a discount, thereby lowering the average entry cost.

The key risk level is $54,000, the network's average cost basis. A break below this level would put the entire network into unrealized loss, marking a bottom in an extreme scenario. The strongest resistance level is at $78,000, coinciding with the average entry price of long-term holders.

At the current price of $70,500, which is about 13% below this resistance level, a significant amount of recently entered short-term capital is in unrealized loss. A decisive break above $78,000 in the short term warrants close attention.

Surface growth, underlying stagnation

In the first half of April, Bitcoin's average daily transaction volume reached 564,000, a 37.9% increase year-over-year. The surface data looks impressive, but the details tell a different story.

Active addresses during the same period fell to 428,000, down 13.2% year-over-year and 4.2% quarter-over-quarter. The average transaction size dropped to 1.19 BTC, a 34.1% decline from Q1's 1.80 BTC. Transaction count is up, but both participants and the value per transaction are declining. This pattern reflects repeated small transfers by a few users rather than widespread economic usage of the network. A large portion of this volume growth likely comes from mechanical movements like exchange deposits, unrelated to genuine growth.

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

Fundamental indicator adjusted down to -10%

Surface growth has not translated into genuine network expansion, and the underlying data supporting the BTCFi thesis has weakened. The balance of offsetting positive and negative signals from Q1 has shifted. The Q2 fundamental indicator is lowered from 0% to the bottom line of -10%.

Target price of $143,000, still has 2x upside potential

Using the TVM method, the neutral baseline based on the average price in early April 2026 is $132,500. After applying the -10% fundamental adjustment and the +20% macro adjustment, the 12-month target price is set at $143,000.

This figure is approximately 23% lower than the Q1 target of $185,500. However, the actual upside potential has actually expanded. Based on the average price, the upside has increased from +93% in Q1 to +103% in Q2.

The downward revision of the target price does not imply pessimism. The macro direction and on-chain structure continue to support the mid-to-long-term bullish narrative.

Three short-term points to watch:

• A decisive break above the network's mid-term equilibrium level of $78,000;
• Continued net inflows into ETFs;
• A shift in Fed policy following the easing of geopolitical risks.

If these three conditions are met simultaneously, the $143,000 target remains achievable.