Fidelity warns: Despite August rebound, Bitcoin bear market may not be over yet

Fidelity Digital Assets Warning: Despite Bitcoin's strong performance in August, the bear market may not end.

Fidelity Digital Assets warned that Bitcoin's strong performance in August does not mean that the broader bear market for the cryptocurrency is over. Although the recent rebound has improved market conditions, the company said investors should still consider the possibility of another market bottom later this year.

In August, Bitcoin recorded its strongest monthly gain since the end of 2024, and Ethereum and other major cryptocurrencies also recorded significant gains. This trend has prompted some investors to believe that the market may have established a bottom.

Key Points

• Fidelity pointed out that although Bitcoin rebounded strongly in August, its bear market may not be over yet.
• The four-year cycle model points potential attention to November 2026, although Fidelity emphasizes that the model is not a reliable time prediction tool.
• In the third week of August, Bitcoin rose more than 25%, while Ethereum and Solana rose 34.1% and 28%, respectively.
• Increased stablecoin activity, real-world asset adoption, institutional engagement, and regulatory developments may support a broader market recovery.

Four-year cycle continues to focus on November

Fidelity's latest digital asset outlook points to Bitcoin's historical market cycle as one reason investors remain cautious. The last major bear market bottom for Bitcoin occurred in November 2022. If the roughly four-year pattern repeats, another potential bottom could emerge around November 2026.

However, Fidelity emphasized that investors should not view this cycle as an accurate forecast model. Bitcoin's historical cycle does not always last exactly four years, which means that the market may have bottomed out in July or fall again later in the year.

Chris Kuiper, vice president of digital asset research at Fidelity, said the broader significance of this cycle may be related to the way digital assets are adopted. "What's more important for investors is that the adoption of digital assets occurs in the form of a wave, which can lead to a continuation of the cycle. Given this, having a long-term perspective and holding period has historically been the most beneficial strategy for investors." He added.

The August rally provides evidence of a possible shift.

Fidelity also identified several developments that could support the argument that the market is moving away from the bearish stage. Bitcoin traded relatively thinly through most of the third quarter until late August when volatility increased sharply. In the third week alone, Bitcoin rose more than 25%, Ethereum rose 34.1%, and Solana rose 28%.

According to Fidelity, past bitcoin bear markets have sometimes ended after a period of low volatility, with a sharp expansion of price activity. Kuiper said the period from June to mid-August showed signs of weakening selling pressure, with several digital assets trading at prices close to the lower end of their historical valuation range.

Subsequent price expansion thus became a factor indicating that the market may be approaching a turning point. However, Fidelity did not view the rebound as confirmation of a new bull market.

In addition, crypto analyst Darkfost described Bitcoin as being at the "tipping point between a truly bullish recovery and a revised continuation." According to the analyst, futures trading is currently driving the market, while spot demand has declined. Darkfost said speculation can generate short-term price fluctuations, but to maintain momentum, spot purchasing power needs to develop in tandem with derivatives activity. "The balance still exists and still favors the buyer. But the question is, what types of buyers are driving the market? Speculation can trigger volatility, but for momentum to become sustainable, spot demand must be synchronized." The analyst pointed out.

This chart perfectly illustrates the divisions that are taking place in today's BTC trading. The reason why we pay close attention to it is because everyone knows that Bitcoin is now at the tipping point between a truly bullish recovery and a revised continuation.

Regulatory and institutional needs remain important

Fidelity identified potential factors such as regulatory progress, institutional adoption, monetary policy and new cryptocurrency use cases that could affect the next stage of the market. In the United States, attention has focused on the CLARITY Act, which aims to establish clearer regulatory responsibilities for digital assets. The legislation has passed the House of Representatives and is still under consideration in the Senate.

The U.S. Securities and Exchange Commission (SEC) has also proposed a new regulatory framework that could provide exemptions to securities registration requirements for certain early-stage crypto asset offerings. The proposal still requires public comment.

What to focus on next

Bitcoin's August recovery has improved market prospects, but Fidelity's assessment suggests investors should not assume that the bear market has definitely ended. The next stage depends on whether higher prices are supported by continued adoption, institutional participation and spot market demand, rather than just short-term fluctuations. For now, investors who follow the four-year cycle theory continue to focus on the November date, while Fidelity continues to emphasize that historical patterns should not be used as a way to accurately predict the bottom of the Bitcoin market.