Fidelity Says Rate Cuts, Clarity Act and Stablecoins Could Help End Crypto Bear Market

Fidelity has identified five potential catalysts that could help bring the cryptocurrency bear market to an end: Bitcoin’s four-year cycle, regulatory changes, a shift in monetary policy, new use cases and broader institutional adoption.

In a report released June 30, Fidelity wrote that several factors have historically helped spark new crypto bull markets. Even if those conditions return, however, there is no guarantee another rally will follow.

Fidelity said Bitcoin entered a bear market after rising above a record $126,200 in October 2025. The token posted a short-term rebound from March through May this year, but is now trading below $69,000, the peak reached during the 2019-2021 bull market.

The firm said there is room for debate over whether the current market qualifies as a bear market on technical grounds. In past Bitcoin bear markets, the token fell at least 77% from its peak, while this year’s June low was down about 53% from the previous high. From a sentiment standpoint, though, Fidelity said the bullish mood had disappeared in 2026.

The first variable is Bitcoin’s four-year cycle. Fidelity said Bitcoin has historically tended to form bull-market tops and bear-market bottoms at roughly four-year intervals. If that pattern continues, the current bear market could bottom around November 2026, given that the previous bear-market low came in November 2022.

A key driver of that cycle is the halving. Bitcoin is designed so that mining rewards are cut in half about every four years. If demand holds steady or rises while new supply slows, that can create upward pressure on prices. Fidelity said the four-year cycle should be used as a guide to the broader trend rather than as a mechanical trading signal.

The second variable is regulatory change. Fidelity said crypto-friendly regulation has at times helped start or extend bull markets. At the start of the 2015 rally, New York’s Department of Financial Services licensing regime for crypto businesses helped restore market confidence. In 2024, the US Securities and Exchange Commission’s approval of spot Bitcoin exchange-traded products, or ETPs, supported Bitcoin’s climb to fresh records.

Fidelity pointed to the US Clarity Act as the legislation now drawing the market’s attention. The bill aims to establish a legal framework for the US digital-asset market. If passed, it could reduce uncertainty for crypto businesses operating in the country. As of June 2026, however, the measure was still under discussion in Congress.

The third variable is monetary policy. Fidelity said crypto prices have tended to rise when the Federal Reserve cuts interest rates. Because digital assets are generally treated as risk assets, lower rates and easier liquidity conditions can increase investors’ appetite for risk.

Expectations for higher rates, by contrast, have weighed on Bitcoin. Fidelity said some investors still see a possibility of rate hikes later this year given the inflation backdrop. If inflation slows unexpectedly and the Fed cuts rates instead, that could provide meaningful support for the crypto market.

The fourth variable is the spread of new use cases. Fidelity said nonfungible tokens, or NFTs, and memecoins drew broad public attention during the 2019-2021 bull market and brought new investors into the market.

Among the areas now in focus, it cited tokenization of real-world assets, stablecoins and crypto use cases tied to artificial intelligence. Tokenization of real-world assets refers to recording and transferring ownership of traditional assets such as real estate, commodities and private credit on a blockchain. Stablecoins are cryptocurrencies designed to track fiat currencies such as the dollar, and Fidelity said adoption has accelerated since the Genius Act in 2025.

Crypto projects tied to AI include use cases linked to machine learning functions, graphics processing unit computing networks and AI agents. Fidelity said the catalyst for the next bull market could emerge from an area the market is not currently anticipating.

The fifth variable is broader institutional adoption. Fidelity said one factor behind the 2020 bull market was a wave of announcements from listed companies that they would add Bitcoin to their balance sheets. It also said the 2024 approval of spot Bitcoin ETPs and the 2025 US announcement of a strategic digital-asset reserve helped drive Bitcoin to a new all-time high.

Still, institutional adoption is no longer a new story in 2026, Fidelity said. Institutional participation has continued to grow through the bear market, but it has yet to produce a clear signal of a bullish turn. A new narrative could emerge if one of the Magnificent Seven companies announces a large crypto holding or if geopolitical events prompt institutions to start using digital assets as a hedge.

Fidelity said it is impossible to predict when the crypto bear market will end. The report said any one of these factors could trigger a new bull market, but even if all of them appear, the recovery investors expect may still fail to materialize.

Fidelity said long-term tailwinds for the crypto market remain in place, including broader stablecoin adoption. It added that investors should keep in mind that digital assets are highly volatile, may be vulnerable to market manipulation, and are not protected by deposit insurance or investor-protection programs for securities holders.