Written by: Tiger Research

Translated by: AididiaoJP, Foresight News

Key Points

The macro environment remains supportive, though the pace has slowed: Global M2 reached a historic high of $13.44 trillion, with Bitcoin ETF inflows shifting to net inflows for the first time in 14 months. However, the oil shock caused by the Iran conflict pushed March CPI up to 3.3%, narrowing the Federal Reserve's interest rate cut path.

Bitcoin's on-chain indicators are shifting from undervaluation to early equilibrium: Key on-chain indicators have moved out of the panic zone from the first quarter. The current price is $70,500, approximately 13% lower than the long-term holders' average cost basis of $78,000. Breaking 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 increase still hold: Based on a neutral benchmark of $132,500, adjustments of -10% for fundamentals and +20% for macro factors apply. This is a downward adjustment from the first quarter's target of $185,500, but the significant pullback in spot prices means that the actual upside potential calculated from the current price level has actually increased.

Macro tailwinds are still present, but momentum has slowed

Since the first quarter report was released, Bitcoin has dropped about 27%, with the average price hovering around $70,500 in early April. The Iran conflict introduced a new variable, but the overall macro environment remains favorable. It is the speed that has changed, not the direction.

Liquidity remains at record highs but has not effectively transmitted to Bitcoin

As of February 2026, global M2 continues to expand to near historical highs of $13.44 trillion. However, Bitcoin has dropped 27% since the first quarter. Liquidity and price are exhibiting inverse movement.

The source of liquidity explains this divergence. Over the past year, more than 60% of the M2 growth in the four major economies (China, the U.S., the Eurozone, and Japan) came from China, attributed to the People's Bank of China reducing reserve requirements and the formal shift to an accommodative stance in the first quarter.

The U.S. contribution was only 10%. The issue is that the channels for liquidity from China to enter the Bitcoin market are limited. Domestic restrictions on crypto trading still exist, while indirect channels through Hong Kong and Singapore primarily serve institutional funds. Global liquidity is at a historical peak, but the share that can actually reach the Bitcoin market is shrinking.

The Iran conflict slows the Federal Reserve's rate cut pace

Due to the blockage of liquidity from China, dollar liquidity remains the main driver for Bitcoin. However, even this segment has been delayed by the Iran conflict.

After the U.S. launched strikes against Iran on February 28, the Strait of Hormuz was blocked. Brent crude oil skyrocketed to $118 per barrel in mid-March, and Dubai crude hit a historic high of $166 per barrel. This shock directly pushed up inflation. The U.S. March CPI rose from 2.4% in February to 3.3%, marking a two-year high. The Fed's rate cut potential subsequently narrowed. The March dot plot reduced the rate cut expectations for 2026 to just one time.

Nevertheless, the direction of easing has not changed. In mid-April, parts of the Strait of Hormuz were reopened, and oil prices significantly retreated to around $90. The core CPI stabilized at 2.6%, indicating that the shock has not fully transmitted to the overall economy. President Trump nominated Kevin Warsh as the next Federal Reserve Chairman at the end of January, with Senate confirmation hearings ongoing. Powell's term will end on May 15, and a tendency towards easing is likely to continue. The number of rate cuts may decrease, but the direction will remain unchanged.

Institutional fund flows begin to reverse

Institutional outflows that drove the decline in the first quarter have begun to reverse. Bitcoin spot ETFs recorded the worst monthly outflow since their launch in November 2025 and remained in net outflow for five consecutive months. However, since March, monthly net inflows have turned positive. As of mid-April, the cumulative fund flow for the year is positive, with total assets under management rebounding to $96.5 billion.

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

Macro indicators adjusted to +20%

Structural tailwinds remain intact: liquidity expansion, a tendency towards policy easing, institutional fund flows returning to positive, and progress on the U.S. CLARITY Act. Recent headwinds—the oil shock caused by Iran and the Fed's slower rate cuts—have partially offset these positives. The macro indicators for the second quarter have been adjusted down by 5 percentage points from the first quarter, to +20%.

From underestimation to early equilibrium

On-chain indicators have moved out of the extreme panic zone and are transitioning towards the boundaries of undervaluation and equilibrium. Key indicators such as MVRV-Z, NUPL, and aSOPR have shifted out of the panic zone from the first quarter and into the early recovery stage. While it is unlikely to see a massive increase like during a rebound from the panic zone, historical data indicates that the average one-year return starting from this area has consistently remained in double digits. The risk-reward ratio at this time is still in the most favorable position.

It is noteworthy that the average cost basis for short-term holders (STH) is gradually declining. This indicates that speculative funds are exiting, while new buyers are accumulating at lower price points. The timing coincides with the restart of ETF net inflows and large-scale purchases by Strategy, supporting the view that institutional investors are continuously accumulating within the discount range, thus bringing down the average entry cost.

The key risk level is $54,000, which is the average cost basis across the network. Falling below this point would put the entire network in an unrealized loss state, becoming a bottom in extreme scenarios. The strongest resistance level is at $78,000, coinciding with the long-term holders' average entry cost.

The current price of $70,500 is about 13% lower than that resistance level, putting a significant amount of recent entry short-term funds in an unrealized loss state. A decisive breakthrough above $78,000 in the short term is worth close attention.

Surface growth, underlying stagnation

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

During the same period, the number of active addresses dropped to 428,000, a year-on-year decline of 13.2% and a month-on-month decline of 4.2%. The average transaction size decreased to 1.19 BTC, down 34.1% from the previous quarter's 1.80 BTC. The number of transactions is rising, but the number of participants and the value per transaction are both declining. This pattern reflects a few users repeatedly making small transfers, rather than the widespread economic utilization of the network. A significant portion of the growth in trading volume may stem from mechanical flows like exchange deposits, unrelated to real growth.

The first quarter report maintained the fundamental indicators at 0%, based on expectations for BTCFi ecosystem expansion. Entering the second quarter, this argument has significantly weakened. According to The Block's "2026 Digital Asset Outlook," Bitcoin L2 TVL has dropped 74% year-to-date, and BTCFi's total TVL has decreased by 10%, representing only 0.46% of Bitcoin's total supply (91,332 BTC). While individual protocols like Babylon and Lombard have seen some growth, the entire ecosystem has contracted.

Fundamental indicators adjusted to -10%

Surface growth has not translated into real network expansion, and the underlying data supporting the BTCFi argument has weakened. The equilibrium where positive and negative signals offset each other has been broken. The fundamental indicators for the second quarter have been adjusted down from 0% to a baseline of -10%.

Target price of $143,000, still a potential for 2x increase

Using the TVM method, the neutral benchmark calculated based on the average price at the beginning of April 2026 is $132,500. After applying adjustments of -10% for fundamentals and +20% for macro factors, the 12-month target price is set at $143,000.

This figure is approximately 23% lower than the first quarter's target of $185,500. However, the actual upside potential has instead increased. Calculated based on average price, the upward space has expanded from +93% in the first quarter to +103% in the second quarter.

The downward adjustment of the target price does not represent pessimism. The macro direction and on-chain structure still support the logic of a medium to long-term bull market.

Three short-term observation points:

• Decisively break through the mid-level equilibrium position of $78,000;
• Continuous net inflow into ETFs;
• A shift in Federal Reserve policy after geopolitical risks ease.

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