Bitcoin delivered its strongest monthly performance since November 2024 in August, but Fidelity has warned that the surge is not enough to show the cryptocurrency’s latest bear market is over.
In its fourth-quarter crypto market outlook, Fidelity said Bitcoin, Ethereum and several altcoins recorded their strongest positive months since late 2025. Bitcoin rose by more than 25% during the third week of August alone, while Ethereum gained 34.1% and Solana increased by 28%.
The sharp gains followed a period of relatively subdued trading between June and the middle of August. Fidelity said the rally could mark the start of a sustained recovery, but also cautioned that it might prove to be only a temporary move within a wider bear market.
November cycle offers possible test
Some investors are looking to November 2026 as a possible market-bottom period because of Bitcoin’s historical four-year cycle. The cryptocurrency’s previous major bear-market low came in November 2022, and applying a similar interval would suggest another potential bottom around November 2026.
Fidelity stressed, however, that Bitcoin’s past cycles have not followed an exact four-year timetable and should not be treated as a reliable way of identifying turning points.
The firm said Bitcoin may already have reached a low in July. Alternatively, it could fall again and establish another bottom in November or at a later date.
Chris Kuiper, vice president of research at Fidelity Digital Assets, said adoption had historically developed in waves, helping to support longer-term market cycles. He added that holding an asset for a longer period had generally been more effective than trying to predict the precise date of a market bottom.
That conclusion is based on historical performance and does not demonstrate that Bitcoin will repeat previous cycles or continue to rise.
Fidelity said one possible recovery signal was Bitcoin’s move from a period of low volatility into a sharp upward expansion. The firm suggested this could indicate that selling pressure was beginning to weaken.
Kuiper said digital assets had experienced comparatively low volatility from June until the middle of August. Fidelity’s analysis placed assets including Bitcoin near the lower, or “value”, end of their historical trading ranges during that period.
The subsequent rally showed similarities with volatility patterns observed around some previous bear-market endings. Bitcoin climbed rapidly above $80,000 before falling back towards $79,250. crypto.news said the rise had also increased the risk of a short-term pullback because the market was becoming overbought.
That technical pattern did not prove that a new bear market had begun. Instead, it suggested Bitcoin had advanced quickly enough to make a period of consolidation more likely.
Kuiper also pointed to the market’s resilience in the face of events that might previously have weighed on prices. These included a hardware-wallet security incident and delays linked to the CLARITY Act, neither of which ended the August rally.
This resilience “could further strengthen the case” that cryptocurrencies are near a bottom, Kuiper said, while making clear that it did not confirm one.
Adoption remains strong despite weaker prices
Fidelity said demand and use of digital assets had remained resilient during the earlier decline in prices. Stablecoin transaction volumes, tokenised real-world assets and institutional participation all continued to grow while the total cryptocurrency market capitalisation weakened.
The firm compared measures of network adoption with the fundamental indicators used to assess traditional businesses. Increased transaction activity can point to continued use of a network, although it does not guarantee that the price of its associated token will rise.
Institutional investment products showed mixed allocation trends before Bitcoin’s August recovery. In related coverage, crypto.news reported that Ethereum funds attracted more capital than Bitcoin funds during July.
Demand for Bitcoin exchange-traded funds then recovered in August. Fidelity identified stronger institutional adoption as one factor that could help support another bull market, alongside regulatory changes, monetary policy and the development of new blockchain use cases.
US regulation among fourth-quarter catalysts
The US regulatory timetable could provide two significant tests for the market during the fourth quarter.
The CLARITY Act remains before the Senate after the Senate Banking Committee approved it by a bipartisan 15-9 vote in May. A procedural vote is scheduled for 15 September and requires 60 votes for the bill to move towards debate.
The proposed legislation would allocate parts of digital-asset oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Its passage is not guaranteed, while further amendments could mean it would need to return to the House for additional consideration.
As reported by crypto.news, the bill faces a tight timetable in Congress before the midterm elections.
The SEC separately proposed Regulation Crypto Assets on 18 August. The framework would establish two securities-registration exemptions for qualifying crypto investment contracts.
Under the formal proposal, eligible offerings could raise up to $5m over four years or $75m within a 12-month period, provided they met specific conditions. The consultation period remains open until 20 October 2026.
The proposal is not final and could be altered after the SEC reviews public comments. crypto.news has previously examined how the exemptions could change the way tokens are funded.
Fidelity said the outcome of these policy developments, together with monetary conditions and institutional activity, could influence Bitcoin’s direction during the fourth quarter. None of them confirms that the bear market has ended, leaving future price movements and adoption data as important tests of whether August’s rally can develop into a lasting recovery.
