Bitcoin Bear Market May Not Be Over, Fidelity Warns Despite August Rally
Bitcoin posted its strongest monthly performance since November 2024 in August, but Fidelity Digital Assets cautioned that the rebound does not yet establish that the cryptocurrency’s latest bear market has ended.
In its fourth-quarter crypto market outlook, Fidelity said Bitcoin, Ethereum and several major altcoins experienced their strongest positive months since late 2025. Bitcoin gained more than 25% during the third week of August alone, while Ethereum climbed 34.1% and Solana rose 28%.
The gains followed a period of relatively subdued activity from June through mid-August. Even so, Fidelity said the sharp recovery could represent either the early stages of a sustained market recovery or a temporary rally within a broader bear market.
Bitcoin Price Recovery Faces November Cycle Test
Historical Bitcoin market cycles are drawing attention to November 2026 as a potential period for another market bottom. Bitcoin’s previous major bear-market low occurred in November 2022, and applying a similar four-year interval would point toward November 2026.
Fidelity, however, warned against treating the historical pattern as a precise forecasting tool. Previous Bitcoin cycles have not adhered to exact four-year schedules, meaning the timing of a future market bottom cannot be reliably determined from historical patterns alone.
The firm said Bitcoin may already have established a low in July. Alternatively, prices could decline again and form another bottom in November or at a later point.
“Despite the recent push higher in price, there is no guarantee the bear market is over,” Fidelity said.
Chris Kuiper, vice president of research at Fidelity Digital Assets, said cryptocurrency adoption has historically developed in waves that can help extend market cycles. He also argued that maintaining a longer investment horizon has generally been more useful than attempting to identify an exact market bottom.
That historical observation, however, does not guarantee that Bitcoin will follow the same trajectory in the current cycle.
Bitcoin Volatility Shift May Signal Seller Exhaustion
Fidelity also pointed to Bitcoin’s transition from relatively low volatility to a sharp upward move as a potential indication that selling pressure had weakened.
According to Kuiper, digital assets experienced comparatively low volatility from June through mid-August. Fidelity’s analysis placed assets including Bitcoin near the lower, or “value,” end of their historical ranges during that period.
The subsequent rally showed volatility characteristics that Fidelity has observed around some previous bear-market endings. Bitcoin’s rapid move above $80,000 was later followed by a retreat toward $79,250, reflecting the potential for short-term consolidation after a steep advance.
That pullback did not establish a new bear market. Instead, it reflected the increased risk of a near-term correction after Bitcoin’s rapid rise.
Kuiper also highlighted the market’s resilience in the face of developments that might previously have weighed more heavily on cryptocurrency prices, including a hardware-wallet security incident and delays involving the CLARITY Act.
According to Kuiper, that resilience “could further strengthen the case” that cryptocurrencies are approaching a bottom. He stopped short, however, of treating the evidence as confirmation that a market low had been established.
Crypto Adoption Remained Resilient During Market Weakness
Fidelity’s analysis also found that underlying digital-asset adoption continued despite weakness in overall cryptocurrency market capitalization.
Stablecoin transaction activity, tokenized real-world assets and institutional participation continued to expand during the earlier market decline. Fidelity compared these network adoption measures with fundamental indicators commonly used to evaluate traditional businesses.
Higher transaction activity can indicate continued network use, although it does not necessarily translate into higher cryptocurrency prices.
Institutional investment products showed mixed allocation patterns before the August recovery. Ethereum funds attracted more capital than Bitcoin funds during July, while demand for Bitcoin exchange-traded funds recovered during August.
Fidelity identified stronger institutional participation as one factor that could help support another cryptocurrency bull market. It also pointed to regulatory developments, monetary policy and new blockchain use cases as potential factors influencing the market’s next phase.
U.S. Crypto Policy Could Shape Bitcoin’s Fourth Quarter
Regulatory developments in the United States are expected to provide important tests for the cryptocurrency market during the fourth quarter.
The CLARITY Act remains pending in the Senate after the Senate Banking Committee advanced the legislation by a bipartisan 15–9 vote in May. A procedural vote is scheduled for Sept. 15 and requires 60 votes to move the bill toward debate.
The legislation would divide elements of digital-asset regulatory oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Its passage remains uncertain, and additional amendments could potentially require further consideration in the House.
Separately, the SEC proposed Regulation Crypto Assets on Aug. 18. The proposal would establish two securities-registration exemptions for qualifying crypto investment contracts.
Under the formal proposal, eligible offerings could raise up to $5 million over four years or $75 million within a 12-month period, subject to specific requirements. The SEC is accepting public comments through Oct. 20, and the proposed framework is not final.
Together with monetary conditions and institutional participation, those policy developments could influence Bitcoin’s direction during the fourth quarter.
For now, Fidelity’s assessment remains cautious. The August rally provides evidence of renewed market strength, while continued adoption and changing volatility offer additional signs of resilience. But neither those developments nor historical cycle patterns confirms that Bitcoin has definitively emerged from its bear market.
Source: Crypto.news
Writer: Marcus RenfieldCrypto Market Analyst & Onchain WriterMarcus Renfield covers cryptocurrency markets with a focus on onchain data, Bitcoin price action, and emerging market narratives. His writing examines how capital flows, network activity, and broader market structure influence short- and medium-term trends.He aims to provide clear, data-informed analysis for readers seeking a deeper understanding of crypto market dynamics.