Bitcoin (BTC) Spent 83% of 92 Days Undervalued, Fidelity Says

Bitcoin News

Fidelity Digital Assets placed Bitcoin (BTC) at the center of a late-cycle assessment, arguing that its yardstick metric has spent 83% of the last 92 days in undervalued territory. The report compares normalized market capitalization with network hashrate through a Z-score, treating readings below minus one standard deviation as cheap relative to the energy securing the network. The asset's drawdown from its recent high is about 50%, which the firm views as shallower than prior bear market troughs. Hashrate has fallen only about 22% from its peak, implying miner cost discipline. With the current downturn already 203 days old and earlier undervalued stretches lasting roughly 300 days, Fidelity framed October 2026 as a pivotal timing window.

Bitcoin's stabilization near $64,000 reflected a broader risk-asset repair rather than a crypto-specific catalyst, with U.S. equity futures strengthening after Microsoft demonstrated that heavy AI spending can convert into cloud growth. S&P 500 futures advanced 0.2% and Nasdaq 100 contracts rose 0.4%, while Microsoft shares climbed 8% before the open as its cloud unit posted its fastest expansion in four years and kept capital expenditure under control. The move countered earlier pressure after another large technology issuer lifted spending forecasts. Derivatives desks also digested a Federal Reserve decision to keep rates at 3.50%-3.75%, leaving Bitcoin rangebound after a failed test of $67,000 and a weekend bounce tied to Middle East de-escalation headlines.

Core Scientific paid $41.9 million to cancel a Bitcoin ASIC mining machine contract with Block's Proto unit, removing a planned 3-nanometer fleet of about 15 EH/s and underscoring its shift toward AI infrastructure. Company disclosures show the miner will not buy new machines to preserve or expand hashrate; instead it plans to monetize existing equipment, retrofit facilities and dispose of assets where appropriate. The pivot is already visible in quarterly results. Colocation revenue reached $136.7 million, or 83% of total sales, compared with $10.6 million a year earlier, while self-mining revenue fell 66% to $21.5 million. Billable colocation capacity rose from 395 megawatts at June 30 to 437 megawatts by mid-July, with customer leases approaching 1.1 gigawatts.

On-chain data show Bitcoin's short-term holder realized capitalization has fallen about 62% from its October 2025 high, moving closer to drawdowns historically associated with late-stage weakness. Realized capitalization values coins at the price they last moved, so it reflects the actual cost basis of active holders rather than the latest market price. Analysts attribute the decline to two mechanical forces: high-cost coins being sold in stress, which removes expensive unspent transaction outputs, and fresh buying at lower levels, which creates cheaper outputs. Together, those flows compress the short-term cohort's aggregate value. Previous bear market phases produced 70% to 75% contractions, leaving the current 62% drop as a signal that capital destruction is advanced but not necessarily complete.

Derivatives data show how quickly leverage can reset even when spot prices barely move. More than 87,000 traders were forcibly closed across crypto markets in 24 hours, producing $286 million in liquidations, with $186 million on longs and $100 million on shorts. Bitcoin accounted for about $57 million of the total, almost evenly split between $28 million of long losses and $29 million of short losses, while the price stayed between $63,247 and $64,660. The largest altcoin casualty was Ether, with $58 million in forced closures. Losses clustered around the Federal Reserve window, and perpetual futures, which make up about 93% of crypto futures volume, also produced unusual technology-stock liquidations on memory names.

Macro events in Asia added another layer of caution. The Bank of Japan held a two-day policy meeting ending July 31, with markets expecting the policy rate to remain near 1.0%, but the risk lies in yen carry-trade unwinding: cheaper yen funding has long supported risk assets, and a policy tightening could reverse that flow. After the Bank of Japan's July 2024 rate increase, Bitcoin fell more than 20% into early August. Separately, Hitachi and 17 financial and crypto firms completed an anti-money-laundering trial that monitors issued stablecoins for suspicious transfers, with a commercial service planned for October. Samsung's quarterly disclosures showed its semiconductor profit rose 223-fold, yet shares gained only 1%, underscoring cautious sentiment across AI-linked and crypto assets.

COINOTAG's proprietary 42-indicator composite S/R scoring engine shows Bitcoin (BTC) at $64,626, with the strongest support at $63,649 rated 68/100, driven by the confluence of SMA 50 and Fibo 0.236, while the dominant resistance at $66,956 scores 74/100 on Donchian Upper and Swing High signals. A nearer flip level at $65,316 carries a 50/100 score. Derivatives positioning is mildly bullish but crowded: funding is 0.0068%, open interest $12.56 billion, and the long-short account ratio 1.55, leaving 60.8% accounts long. The Fear and Greed Index at 28 signals fear, RSI 51.82 is neutral, and MACD is bearish. A daily close above $66,956 would favor a test of $69,267; losing $63,649 would expose $61,468 and invalidate the range-support thesis.