Fidelity Warns Bitcoin Bear Market May Continue Despite August Rally

Fidelity analysts warn that Bitcoin's bear market may continue despite the recent August rally. According to their analysis, a bottom might have formed in July, but if historical cycles persist, another new low could occur around November.

This warning is based on Fidelity's observation of four-year patterns in Bitcoin's price history. The previous bear market low was in November 2022, and if this pattern continues, the next low might be around November this year. However, Chris Kuiper, Vice President of Research at Digital Assets, cautioned that these historical cycles have never lasted exactly four years.

Kuiper attributed the observed cyclicality to waves of digital asset adoption, noting that 'cryptocurrency adoption has occurred in waves, which can sustain cycles.'

The analysts identified a potentially positive signal in the change of volatility. Previous bear phases often ended with low price fluctuations followed by a sharp increase in market activity and upward price movement.

The August rally was seen as an argument for a potential reversal, but Fidelity emphasized that this alone does not confirm the start of a new bull market. Kuiper noted that the market's resilience to negative events is also a positive sign, as certain news that might have intensified sell-offs did not lead to significant price declines.

The analysts highlighted several factors that could support the next cycle, including the development of the regulatory environment in the US, further institutional adoption, changes in monetary policy, and emergence of new use cases for digital assets.