BlackRock warns: Bitcoin bear market may not be over yet

Bitcoin recorded its strongest monthly gain in August since the second half of the year, but Fidelity warned that it is uncertain whether the bear market will end.

According to Fidelity's fourth-quarter outlook report, Bitcoin recorded its strongest monthly gain in August since November 2024. However, Fidelity pointed out that this rise does not prove that the latest cryptocurrency bear market is over.

As market volatility increased sharply again, Bitcoin gained more than 25% during the third week of August. Fidelity mentioned in its report that Bitcoin, Ethereum and multiple altcoins all recorded the strongest positive monthly performance before the second half of 2025. Specifically, in the third week of August alone, Bitcoin rose by more than 25%, while Ethereum rose by 34.1% and Solana rose by 28%. The gains came after relatively sluggish market activity from June to mid-August.

However, Fidelity warned that the rally could mark the beginning of a sustained recovery, or it could just extend temporary swings in the course of a bear market.

Bitcoin bear market faces cycle test in November 2026

Some investors are closely watching November 2026 as a potential market bottom based on a four-year cycle in Bitcoin's history. The last major bear market for Bitcoin came in November 2022. If the same approximate interval is followed, the next potential bottom could appear around November 2026. Fidelity emphasized that historical cycles have never strictly followed a precise four-year timetable, making it impossible to reliably identify market turning points.

The company said Bitcoin may have hit bottom in July. But there could also be another decline and another low established in November or later. "Despite recent price hikes, there is no guarantee that the bear market is over," Fidelity said.

Chris Kuiper, vice president of digital asset research at Fidelity, pointed out that historically adoption rates have occurred in waves, which helps maintain market cycles. He believes that longer holding periods are often more effective than trying to make a precise bottom reading. This view is still based on observations of historical performance and does not establish the conclusion that Bitcoin will repeat its early cycles or continue to appreciate.

Shifts in volatility provide signals of possible recovery

Fidelity views Bitcoin's shift from low volatility to a sharp upward expansion as a possible sign that seller power is exhausted. Kuiper said digital assets experienced relatively low volatility from June to mid-August. Fidelity's analysis shows that during this period, assets, including Bitcoin, were at the lower end of their historical range, or the "value" range.

The subsequent rally was similar to the volatility pattern seen near the end of some previous bear markets. As the analysis pointed out, Bitcoin quickly broke through $80,000 and retreated to around $79,250, indicating that overbought conditions increase the risk of short-term correction. This technical interpretation does not establish a new bear market, but rather suggests that Bitcoin is rising fast enough to increase the probability of a consolidation after a rise.

Kuiper also pointed out that factors that previously could have put pressure on prices-including hardware wallet security incidents and delays related to the CLARITY bill-have not reversed the rebound in August. He said this resilience "may further strengthen" the argument that cryptocurrencies are near the bottom, but he did not confirm it.

Adoption rates continued during weakening of crypto prices

Fidelity said that adoption rates of digital assets remained resilient during previous market downturns. Stability coin trading volume, tokenized real-world assets, and institutional participation continue to grow, despite a weakening overall market value. The company describes the network adoption rate indicator as equivalent to the fundamental indicators used when evaluating traditional businesses. An increase in trading activity can prove continued use, but this does not guarantee that the token price will rise.

Before the rebound in August, the capital allocation model of institutional investment products also showed mixed characteristics. Previous reports pointed out that Ethereum funds attracted more money than Bitcoin funds in July. Subsequently, demand for Bitcoin exchange-traded funds (ETFs) resumed in August. Fidelity listed factors that would support another bull market, including stronger institutional adoption, regulatory changes, monetary policy and new blockchain use cases.

U.S. policy decisions remain key catalyst in the fourth quarter

The U.S. regulatory calendar may provide two major tests in the fourth quarter. The CLARITY bill is still awaiting consideration in the Senate after being passed by the Senate Banking Committee in a 15 - 9 bipartisan vote. A procedural vote scheduled for September 15 requires 60 votes to move the bill into debate. The legislation proposes to divide some of the functions of digital asset regulation between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). However, prospects for passage remain uncertain, and further amendments may require separate consideration by the House.

It is reported that the bill currently faces a tight congressional timetable ahead of the midterm elections. At the same time, the SEC submitted a proposal to "regulate crypto assets" on August 18. The proposed framework would create two securities registration exemptions for eligible crypto investment contracts. The SEC's formal proposal allows issuance of qualified products of up to $5 million over four years or up to $75 million over 12 months under certain conditions. The deadline for public comments is October 20.

Previously, the media has discussed how the proposed exemption will reshape token financing. The proposal has not yet been finalized and may change based on public feedback.

These policy processes, monetary conditions and institutional involvement may shape Bitcoin's direction in the fourth quarter. There is no evidence to confirm that the bear market is over, and price movement and adoption data will continue to serve as a test of the recovery in August.