Bitcoin returns above $80,000, but Fidelity says bear market may not be over yet

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Bitcoin returns above $80,000, but Fidelity says the bear market may not end

Bitcoin surged 4.3% on Friday, climbing above $80,000 again. This recent rally is welcome as a strong rebound at the end of August reversed market sentiment after a stressful period of most of the third quarter. Among them, Bitcoin posted its strongest monthly gain since November 2024, prompting some investors to believe that the bear market may be over. However, according to Fidelity, it is not yet possible to conclude that this trend is fully established.

Does November constitute the bottom?

One of the focuses of the market is Bitcoin's historic four-year cycle. This cryptocurrency asset typically forms a major bear market bottom and a bull market top at points approximately four years apart. Given that the last bear market bottom occurred in November 2022, if this pattern continues, it points to another potential low point around November 2026.

Although Fidelity emphasized that the four-year cycle does not necessarily repeat and that Bitcoin's bottom may have occurred in July, it still speculated that the cryptocurrency could fall again and hit a new low in November or later.

There are several catalysts that may also affect whether the crypto bear market is over. The financial giant pointed to friendlier crypto regulation, shifts in government monetary policy, the emergence of unexpectedly popular crypto application scenarios, and increased institutional adoption. Price volatility is another factor that the company is concerned about. Historically, Bitcoin's previous bear markets have usually ended with a period of relatively low volatility, followed by rising volatility and pushing prices upward. Fidelity said the market experienced relatively low volatility from June to mid-August, which suggests seller power may have been exhausted.

During this period, its analysis showed that the trading prices of Bitcoin and other crypto assets tended to the lower end of their historical price range, or the "value" range. Volatility increased sharply in late August, with Bitcoin rising more than 25% in the third week of the month. During the same period, Ethereum rose about 34%, and Solana rose 28%. Fidelity pointed out that this price behavior does not confirm that the bear market is over, but is consistent with a possible historical pattern.

At the same time, some events that would normally cause prices to fall-including Coldcard hardware wallet security flaws and stalled progress on the CLARITY Act-did not trigger further declines. This may support the view that the crypto market is near a bottom and is waiting for a new positive catalyst.

Despite weak market sentiment, crypto adoption continues to expand. Bitwise Investments reported in early July that stablecoin trading volume had reached 2.3 times that of Visa. MetaMask also reported in July that real-world asset markets will grow faster in 2026 than in any previous year.

Fidelity said this has created a disconnect between adoption rates and prices as activity in some areas of the crypto industry continues to increase while the overall market remains in a bear market. The recent recovery may indicate that adoption rates and prices are beginning to be "pegged" again. A similar pattern has emerged in the 2021-2022 bear market and subsequent new bull markets that began in late 2022.

Regulatory Focus: CLARITY Act

Regulation remains another key factor in the market. The industry is still waiting for further action from the CLARITY Act, which aims to establish a broader U.S. regulatory framework for digital assets and clarify the responsibilities of federal regulators. The bill has passed the House but remains before the Senate, so its timing and outcome remain uncertain.

The U.S. Securities and Exchange Commission (SEC) has also proposed the Crypto Asset Regulation, which aims to address the issue of circumstances under which certain early-stage crypto asset offerings can be exempted from securities registration requirements. The proposal is still subject to public consultation and has not yet been finalized, but Fidelity described it as an important step towards a more "targeted regulatory approach."