Written by: Prashant Jha

Translated by: Peggy, BlockBeats

Editor's Note: After Bitcoin regained the $80,000 mark, the sentiment in the crypto market has warmed somewhat, but Fidelity's latest report reminds the market: this does not mean that the altcoin market has started.

The report shows that current funds are still primarily concentrated in Bitcoin. Compared to altcoins with higher risks and weaker liquidity, investors still prefer to allocate to assets like BTC that have stronger consensus. Although mainstream altcoins like Ethereum and Solana maintain stable on-chain activity, their price momentum remains weak, indicating that real usage has not translated into sustained buying pressure.

This is also the most critical divergence in the current market: Bitcoin has shown strong resilience, but clear money rotation signals have not yet appeared for altcoins. In previous cycles, altcoin rallies often occurred after funds overflowed from Bitcoin; now, Bitcoin's market share remains high, and market risk appetite is still cautious.

Therefore, the focus of this article is not whether Bitcoin will rebound, but whether altcoins can truly catch this wave of sentiment recovery. Currently, the crypto market is stabilizing, but a full recovery is still a way off. Bitcoin is still leading, and altcoins need to wait for clearer confirmation signals.

The following is the original text:

TL; DR

• Fidelity's latest report shows that Bitcoin continues to outperform the market, while altcoins are constrained by weak momentum and insufficient capital rotation, remaining under pressure.
• Despite stable network activity, Ethereum, Solana, and the broader altcoin market still face pressure.
• After Bitcoin regained the $80,000 mark, market sentiment improved, raising the question: will altcoins also see a recovery?
• Bitcoin (BTC) remains the current mainstay of the crypto market.

Main Text

This is the clearest signal conveyed in the latest edition of Fidelity Digital Assets' "Signals Report." The report analyzes the digital asset market from dimensions such as market momentum, profitability, network activity, and capital flow.

Despite cryptocurrency prices stabilizing after months of volatility, Fidelity believes that investor allocation is still highly concentrated in Bitcoin, with limited risk appetite for broader altcoin assets.

The report gives a relatively cautious judgment on the overall market. As the most liquid and consensus-driven asset in the industry, Bitcoin continues to attract funds; meanwhile, many altcoins remain trapped in long-term adjustment phases and have not exited the recovery cycle.

Altcoins remain stuck in a weak rotation environment

Fidelity's analysis shows that the current market is still leaning towards caution rather than speculation.

During the recent consolidation phase, Bitcoin's market share has remained strong. This suggests that investors still prioritize larger, more liquid assets rather than turning to riskier alternative assets.

Historically, an increase in Bitcoin's market share often corresponds to a phase where altcoins underperform Bitcoin, especially when macroeconomic uncertainty is high.

The report specifically mentions Ethereum (ETH) and Solana (SOL). Fidelity notes that the momentum indicators for these assets are still in the neutral to bearish range, while the unrealized profits for the entire altcoin market remain sluggish.

Despite relatively stable on-chain activity, price performance has largely been sideways. This divergence is worth noting. The network usage of Ethereum and Solana is more resilient than what price trends reflect, indicating that the actual utility at the protocol level is still ongoing.

However, Fidelity believes that relying solely on stronger usage data is not enough to attract sustained capital inflow into the altcoin market. Instead, investors seem more willing to concentrate their exposure in Bitcoin.

The report also emphasizes that since the end of 2024, the broader altcoin market has been in a difficult environment. Many small-cap assets have seen significant declines, while Bitcoin's performance remains relatively stable. Market liquidity outside of leading assets is still weak. The report warns that unless there is a substantial change in momentum or market consensus, altcoins may continue to be under pressure for a longer time.

Fidelity does not directly predict that altcoins will experience a large-scale sell-off again. However, the report clearly states that the kind of comprehensive expansion rally that many traders typically expect during the rebound in later cycles has not yet materialized.

Bitcoin becomes a clear anchor point for market resilience

Although the report takes a cautious stance on altcoins, Fidelity's view on Bitcoin is clearly more constructive. The institution describes BTC as the "anchor point" of the market during the current consolidation phase. As investors seek liquidity and relative stability, funds continue to flow into Bitcoin.

Several indicators in the report support this judgment. Fidelity's "Yardstick" valuation model compares Bitcoin's market capitalization to network hash rate and currently indicates that Bitcoin may be undervalued relative to historical levels.

Combining the recent price weakness and ongoing mining activities, Fidelity believes that the current price range bears similarity to past accumulation phases.

The report does not predict that Bitcoin will break through immediately. Short-term momentum indicators remain somewhat mixed. However, Fidelity believes that the long-term investment logic for Bitcoin remains unchanged, with supporting factors including liquidity characteristics, security models, and the growing participation of institutions. The report argues that as long as Bitcoin's market share remains high, BTC is likely to continue to outperform the broader market.

Bitcoin surpasses $80,000 again, market sentiment changes

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

On May 5, during the Asian trading session, Bitcoin regained $80,000, rising back to levels seen earlier this year. After holding around $75,000 in late April, Bitcoin climbed to the $80,900 to $81,600 range, gaining more than 5% in just a few days.

This rebound has also stimulated part of the altcoin market. Some high-risk assets have risen significantly alongside Bitcoin, with DeFi-related tokens and certain Layer 1 projects recording strong short-term gains. Ethereum also showed signs of recovery, but its relative performance continues to lag behind Bitcoin.

This surge has reignited market discussions: Could the long-awaited rotation of altcoins finally be on the horizon?

However, for now, Fidelity's overall cautious judgment still looms over the market. The report emphasizes that momentum and capital flows are still concentrated in Bitcoin, and a short-term rebound does not necessarily mean the beginning of a sustained recovery cycle.

However, if Bitcoin can hold above $80,000 while its market share stabilizes, the conditions for improving broader market participation may begin to take shape.

The market is still waiting for confirmation signals

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

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

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

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