Despite the recent rally in Bitcoin during August, analysts at Fidelity caution that it is premature to declare the end of the bear market. They suggest that while a bottom may have formed in July, historical trends indicate a potential new low could occur around November.

New Lows Anticipated by Year-End

Fidelity analysts pointed out that the previous bear market low was established in November 2022. If the four-year cycle remains consistent, a subsequent low could similarly emerge in November of this year.

However, they advised against relying solely on this model for precise forecasting, as Bitcoin's historical cycles have never adhered to an exact four-year timeline.

Chris Kuiper, Vice President of Research at Digital Assets, linked the observed cyclicality primarily to waves of adoption of digital assets.

"A more crucial point is that the adoption of cryptocurrencies has occurred in waves, which can sustain cycles," he emphasized.

Indicators of a Possible Turnaround

Fidelity identified changes in volatility as a potentially positive sign. Previous bear markets for Bitcoin often concluded with periods of low price fluctuations, followed by a surge in market activity and rising prices.

From June to mid-August, the market experienced relatively low volatility. According to Kuiper, sellers appeared exhausted during this timeframe, and the prices of several digital assets were at the lower end of historical valuation ranges.

In the third week of August, Bitcoin surged by more than 25%, while Ethereum rose by 34.1% and Solana increased by 28% during the same period.

Fidelity sees this trend as supporting the possibility of a market reversal, although they clarified that it does not confirm the onset of a new bull market.

Kuiper also noted the market's resilience to negative news. He observed that certain announcements, which could have exacerbated sell-offs in a weaker phase, did not lead to significant declines in prices.

Fundamental Market Activity

According to data from Bitwise, cited by Fidelity, the volume of transactions involving stablecoins in July was approximately 2.3 times higher than Visa’s payment volume. The company also highlighted an acceleration in the growth of the RWA market projected for 2026.

Kuiper interprets these metrics as indicators that practical use of blockchain infrastructure has remained strong even amid declining prices.

Fidelity noted that the August rally partially narrowed the gap between price movements and fundamental market activity.

Potential Growth Drivers

Analysts identified several factors that could support the next cycle:

  • the development of regulatory frameworks in the U.S.,
  • further institutional adoption,
  • changes in monetary policy,
  • the emergence of new use cases for digital assets.

They specifically highlighted the CLARITY Act, which aims to clarify the powers of U.S. regulators concerning different categories of digital assets. The bill has already passed the House of Representatives and is currently under Senate consideration.

Additionally, they mentioned the SEC's proposed Regulation Crypto Assets, which would allow certain early-stage token issuances to be exempt from standard securities registration requirements. This proposal is still in the public discussion phase.

It is worth noting that overnight from September 3 to 4, Bitcoin tested the $82,000 mark. Analysts attributed part of this local rally to record inflows into ETFs, which attracted $730 million during the previous trading session.