Written by: Tiger Research

Compiled by AididiaoJP, Foresight News

Key points

The macroeconomic environment remains supportive, albeit at a slower pace: global M2 money supply hit a record high of $13.44 trillion, and Bitcoin ETF inflows turned net for the first time in 14 months. However, the oil shock triggered by the Iranian conflict pushed March CPI up to 3.3%, narrowing the Federal Reserve's path for rate cuts.

Bitcoin's on-chain metrics are shifting from undervaluation to early equilibrium: key on-chain indicators have moved out of the panic zone of the first quarter. Currently priced at $70,500, this is approximately 13% lower than the average entry cost of $78,000 for long-term holders. A break above this level would be a major signal of a short-term trend reversal.

The target price of $143,000 and the potential upside of 2x remain valid: based on a neutral benchmark of $132,500, plus a fundamental adjustment of -10% and a macro adjustment of +20%. This is a downward revision from the Q1 target of $185,500, but the significant pullback in spot prices means that the actual upside potential from current prices is actually larger.

Macro tailwinds remain, but momentum has slowed.

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

Liquidity hit record highs, but failed to translate effectively into Bitcoin.

As of February 2026, global M2 money supply continued to expand to a historical high of nearly $13.44 trillion. However, Bitcoin fell by 27% compared to the first quarter. Liquidity and price are moving in opposite directions.

The source of liquidity explains this divergence. Over 60% of the M2 growth in the four largest economies (China, the United States, the Eurozone, and Japan) over the past year came from China, thanks to the People's Bank of China's reserve requirement ratio cuts and its formal shift to an easing stance in the first quarter.

The US contribution is only 10%. The problem is that liquidity from China has limited channels to enter the Bitcoin market. Domestic restrictions on crypto trading remain in place, and indirect channels through Hong Kong and Singapore primarily serve institutional funds. Global liquidity is at an all-time high, but the share that actually reaches the Bitcoin market is shrinking.

The conflict over Iran slows down the pace of interest rate cuts by the Federal Reserve.

With liquidity transmission from China disrupted, dollar liquidity remains the primary driver of Bitcoin. However, even this component has been hampered by the conflict in Iran.

Following the US-Israeli strikes against Iran on February 28, the Strait of Hormuz was blocked. Brent crude surged to $118 per barrel in mid-March, while Dubai crude hit a record high of $166 per barrel. This shock directly pushed up inflation. The US CPI rose to 3.3% in March from 2.4% in February, a two-year high. The Federal Reserve's room for interest rate cuts subsequently narrowed. The March dot plot reduced the expectation of a rate cut in 2026 to only one.

Despite this, the easing stance remains unchanged. In mid-April, the Strait of Hormuz partially reopened, and oil prices fell sharply to around $90. Core CPI remained stable at 2.6%, indicating that the impact has not yet fully spread to the overall economy. President Trump formally nominated Kevin Warsh as the next Federal Reserve Chairman at the end of January, and Senate confirmation hearings are underway. Powell's term will end on May 15th, and the easing bias is highly likely to continue. The number of rate cuts may decrease, but the overall direction remains the same.

Institutional funding flows begin to reverse

The institutional outflows that drove the first quarter's decline have begun to reverse. Bitcoin spot ETFs recorded their worst monthly outflows since their launch in November 2025, and had been experiencing net outflows for five consecutive months. However, since March, monthly net inflows have turned positive. As of mid-April, year-to-date inflows have turned positive, and total assets under management have rebounded to $96.5 billion.

Corporate cryptocurrency hoarding is also accelerating. Strategy spent $2.54 billion to buy 34,164 Bitcoins 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.

Macroeconomic indicators revised down to +20%

Structural tailwinds remain intact: liquidity expansion, a policy easing bias, institutional funding flows returning to normal, and progress on the U.S. Clarity Act. Recent headwinds—the Iranian-induced oil shock and the Fed's slower pace of rate cuts—have partially offset these positives. Second-quarter macroeconomic indicators were revised down 5 percentage points from the first quarter to +20%.

From undervaluation to early equilibrium

On-chain indicators have moved out of the extreme panic zone and are transitioning towards the boundary of undervaluation and equilibrium. Key indicators such as MVRV-Z, NUPL, and aSOPR have moved out of the panic zone of the first quarter and entered the early recovery phase. While a sharp rise reminiscent of a panic zone rebound is unlikely, historical data shows that the average annual return from this area has consistently remained in double digits. The risk-reward ratio remains optimal at this point.

It's worth noting that the average cost base of short-term holders (STH) is gradually declining. This indicates that speculative funds are exiting, while new buyers are accumulating at lower prices. This timing coincides with the resumption of net inflows into ETFs and large-scale buying by Strategy, supporting the assessment that institutional investors are continuously accumulating in the discount range, thereby lowering the average entry cost.

The key risk level is $54,000, which is the average cost basis of the entire network. A drop below this level would plunge the entire network into an unrealized loss state, representing a bottom in an extreme scenario. The strongest resistance level is at $78,000, coinciding with the average entry cost of long-term holders.

The current price of $70,500 is about 13% lower than this resistance level, meaning a large amount of recently entered short-term funds are currently in a state of unrealized losses. A decisive break above $78,000 in the short term warrants close attention.

Surface growth, underlying stagnation

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

The number of active addresses decreased to 428,000, a 13.2% year-over-year decrease and a 4.2% quarter-over-quarter decrease. The average transaction size dropped to 1.19 BTC, a 34.1% decrease from 1.80 BTC in the previous quarter. While the number of transactions increased, both the number of participants and the value per transaction declined. This pattern reflects a small number of users repeatedly making small transfers, rather than widespread economic utilization of the network. A significant portion of the increase in transaction volume likely comes from mechanical flows such as exchange deposits, and is unrelated to genuine growth.

The Q1 report maintained fundamental metrics at 0%, based on expectations of BTCFi ecosystem expansion. Entering Q2, this argument has significantly weakened. According to The Block's "2026 Digital Asset Outlook," Bitcoin's L2 TVL has fallen 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 growth, the entire ecosystem has contracted.

Fundamental indicators downgraded to -10%

Superficial growth has failed to translate into real network expansion, weakening the underlying data supporting the BTCFi argument. The balance between offsetting positive and negative signals from Q1 has been broken. Q2 fundamental metrics have been revised down from 0% to a bottom line of -10%.

With a target price of $143,000, there is still room for a 2x upside.

Using the TVM methodology, the neutral benchmark calculated based on the average price in early April 2026 is $132,500. After adjusting for fundamentals (-10%) and macroeconomics (+20%), 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 actually expanded. Based on average prices, the upside potential increased from +93% in the first quarter to +103% in the second quarter.

The lowered target price does not indicate pessimism. Macroeconomic trends and on-chain structure still support the medium- to long-term bullish outlook.

Three short-term observation points:

• Decisively broke through the mid-term equilibrium level of $78,000 across the entire network;
• ETFs continue to see net inflows;
• The Federal Reserve has shifted its policy after geopolitical risks eased.

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