Fidelity's latest report: Why haven't funds flowed into Ethereum and Solana since Bitcoin reached $80,000?

Compiled by: Peggy, BlockBeats

Editor's Note: After Bitcoin climbed back above $80,000, crypto market sentiment has improved somewhat, but Fidelity's latest report reminds the market that this does not mean the altcoin rally has begun.

The report shows that current funds are still mainly concentrated in Bitcoin. Compared to altcoins, which are riskier and less liquid, investors still prefer to allocate to assets with stronger consensus, such as BTC. Although on-chain activity of mainstream altcoins such as Ethereum and Solana remains stable, price momentum is still weak, indicating that real-world use has not translated into sustained buying.

This is also the most critical divergence in the current market: Bitcoin has demonstrated strong resilience, but altcoins have not yet shown clear signs of capital rotation. In past cycles, altcoin rallies often occurred after funds spilled over from Bitcoin; however, currently, Bitcoin's market share remains high, and market risk appetite remains cautious.

Therefore, the focus of this article is not whether Bitcoin will rebound, but whether altcoins can truly capitalize on this sentiment recovery. Currently, the crypto market is stabilizing, but a full recovery is not yet possible. Bitcoin continues to lead the pack, while altcoins still need clearer confirmation signals.

The following is the original text:

TL;DR

A recent report from Fidelity shows that Bitcoin continues to outperform the market, while altcoins remain under pressure due to weak momentum and insufficient fund rotation.
Despite stable network activity, Ethereum, Solana, and the broader altcoin market continue to face pressure.
After Bitcoin climbed back above $80,000, market sentiment improved, raising the question: will altcoins follow suit and recover?
Bitcoin (BTC) remains the mainstay of the current crypto market.

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This is the clearest signal delivered by Fidelity Digital Assets' latest Signals Report. The report analyzes the digital asset market from dimensions such as market momentum, profitability, network activity, and fund flows.

Although cryptocurrency prices have stabilized after months of volatility, Fidelity believes that investor allocations remain highly concentrated on Bitcoin, with limited risk appetite for broader altcoin assets.

The report offers a relatively cautious assessment of the overall market. As the most liquid and most solidly supported asset in the industry, Bitcoin continues to attract funds; meanwhile, many altcoins remain mired in a long-term correction phase and have yet to emerge from their recovery cycle.

Altcoins remain trapped in a weak rotation environment.

Fidelity's analysis shows that the current market remains more cautious than speculative.

Bitcoin's market share has remained strong during the recent consolidation phase. This indicates that investors continue to prioritize larger, more liquid assets over riskier alternatives.

Historically, a rise in Bitcoin's market share has often corresponded to a period where altcoins underperform Bitcoin, especially when there is high uncertainty in the macroeconomic environment.

The report specifically mentions Ethereum (ETH) and Solana (SOL). Fidelity points out that the momentum indicators for these two assets remain in the neutral to slightly negative range, while unrealized profits in the overall altcoin market remain sluggish.

Despite relatively stable on-chain activity, price action has largely been sideways. This divergence warrants attention. The network usage of Ethereum and Solana is more resilient than price movements suggest, indicating that practical applications at the protocol level continue.

However, Fidelity believes that stronger usage data alone is not enough to attract sustained capital inflows into the altcoin market. Instead, investors seem to prefer keeping their exposure focused on Bitcoin.

The report also emphasizes that the broader altcoin market has been in a challenging environment since the end of 2024. Many small-cap assets have fallen sharply, while Bitcoin has performed relatively steadily. Market liquidity outside of top-tier assets remains weak. The report warns that altcoins could remain under pressure for an extended period unless there is a substantial shift in momentum or market themes.

Fidelity did not directly predict another large-scale sell-off in altcoins. However, the report clearly points out that the kind of full-blown rally that many traders typically expect during late-cycle rebounds has not yet materialized.

Bitcoin becomes a clear anchor of market resilience.

While the report takes a cautious stance on altcoins, Fidelity's view on Bitcoin is noticeably more constructive. The agency describes BTC as an "anchor" for the market during its current consolidation phase. Funds continue to flow into Bitcoin as investors seek liquidity and relative stability.

Several metrics in the report support this assessment. Fidelity's "Yardstick" valuation model, which compares Bitcoin's market capitalization with its network hashrate, currently suggests that Bitcoin may be undervalued relative to historical levels.

Given the recent price weakness and ongoing mining activity, Fidelity believes that the current price range is similar to past accumulation phases.

The report did not predict an immediate breakout for Bitcoin. Short-term momentum indicators remain mixed. However, Fidelity believes that the longer-term investment logic for Bitcoin remains unchanged, supported by factors such as liquidity characteristics, a robust security model, and increasing institutional participation. The report argues that as long as Bitcoin's market share remains high, BTC is likely to continue outperforming the broader market.

Bitcoin returns above $80,000, market sentiment shifts.

Since the report was released, market sentiment has begun to shift.

During Asian trading hours on May 5th, Bitcoin climbed back above $80,000, returning to levels seen earlier this year. After holding support near $75,000 in late April, Bitcoin rose to the $80,900-$81,600 range, a gain of over 5% in just a few days.

This rebound also boosted the altcoin market. Some high-risk assets followed Bitcoin's significant rise, and DeFi-related tokens and some Layer 1 projects also recorded strong short-term gains. Ethereum also saw a recovery, but its relative performance continued to lag behind Bitcoin.

This surge has reignited market discussions: is the long-awaited altcoin rotation finally about to happen?

However, Fidelity's overall cautious assessment still looms over the market. The report emphasizes that momentum and capital flows remain concentrated on Bitcoin, and a short-term rebound does not necessarily signal the start of a sustained recovery cycle.

However, if Bitcoin can hold above $80,000 and its market share stabilizes, then conditions for improved broader market participation may begin to form.

The market is still waiting for confirmation signals.

Overall, Fidelity's report reflects a market that is somewhere between stabilization and recovery.

Bitcoin continues to demonstrate resilience, further solidifying its role as the industry benchmark asset during times of uncertainty. Meanwhile, altcoins are still seeking stronger upward momentum despite healthier underlying network activity.

The recent rebound has improved market sentiment, but the key to the next phase lies in whether funds will begin to rotate from Bitcoin to the broader market. Currently, Fidelity's signals remain restrained: Bitcoin is still leading the pack, while altcoins still need to prove themselves.