Summary
- Fidelity said Bitcoin (BTC)’s four-year cycle, rising volatility, regulatory changes and institutional adoption will be the key variables in the fourth quarter.
- Fidelity said Bitcoin could form a bottom around November, but it may already have bottomed in July or could set a lower low after November, meaning it is too early to declare the bear market over.
- Fidelity said greater regulatory clarity, shifts in monetary policy and faster institutional adoption could serve as catalysts for the next bull market, and that investors need to watch fourth-quarter price action, policy progress and adoption metrics together.
Forecast Trend Report by Period
Fidelity identified Bitcoin’s four-year cycle, rising volatility, regulatory changes and institutional adoption trends as the main variables for the digital-asset market in the fourth quarter. While a sharp recent rebound has fueled expectations that the bear market may be ending, the firm said it is still too early to declare a definitive bottom.
In its latest fourth-quarter digital-asset outlook, Fidelity said Bitcoin has historically marked bull-market peaks and bear-market troughs at roughly four-year intervals. If that pattern holds, the next major low could arrive around November, following the last major trough in November 2022.
The firm cautioned against applying the four-year cycle mechanically as a market-timing tool. Given the recent rebound, Bitcoin may already have bottomed in July. It could also set a lower low after November.
Recent price moves have lent support to the bottoming case. Bitcoin rose more than 25% in the third week of August alone, while Ether and Solana gained 34.1% and 28%, respectively, over the same period.
Fidelity also pointed to a sharp upside break after volatility stayed subdued from June through mid-August. In past Bitcoin bear markets, selling pressure faded before a low-volatility stretch gave way to larger upside swings.
The market’s response to negative developments has also become more muted. Prices did not extend their declines after a hardware-wallet security incident and delays in the CLARITY Act, a US crypto market structure bill, suggesting selling pressure may have weakened significantly.
Fidelity said market fundamentals remained stronger than price action. Even as total crypto market capitalization weakened in recent months, key adoption metrics such as stablecoin transactions and real-world asset tokenization continued to grow.
Chris Kuiper, vice president of research at Fidelity Digital Assets, said adoption metrics can be viewed as the fundamentals of digital-asset networks. Network usage holding steady or expanding while prices lag is an important signal, he added.
Policy developments will also be critical in the fourth quarter. In the US, the CLARITY Act is awaiting Senate review. The US Securities and Exchange Commission has also proposed a new regulatory framework that includes exemptions from securities registration requirements for early-stage crypto token issuance.
Fidelity said greater regulatory clarity, shifts in monetary policy and faster institutional adoption could catalyze the next bull market. Still, it said investors should assess fourth-quarter price action, policy progress and adoption metrics together rather than conclude from the recent rebound alone that the bear market has ended.
