Bitcoin’s rally in August has revived optimism for the crypto sector, but Fidelity Digital Assets stated that the rebound from June to mid-August was weak. August’s rally was the strongest monthly performance since November 2024, with Bitcoin rising by over 25% during the third week, yet not enough to signify a bottom in the market.
The rally was broad across digital assets, according to Fidelity, with Ethereum up 34.1% and Solana increasing 28%. The firm noted it is still unknown whether this signals the start of a new recovery or a temporary rebound in a continuing bear market.
The watched reference point is November 2026. November 2022 was the previous bear-market low, and some speculators have focused on four-year cycles. Fidelity added that Bitcoin has never had a set schedule for its cycles. It could have been set in July, or the prices may fall again and produce another low in November or later.
Fidelity Digital Assets vice president of research Chris Kuiper noted that in the past, adoption came in waves, and over longer periods of time, sticking to Bitcoin has been more successful than trying to time the bottom, although this does not mean that this will be the same cycle for Bitcoin.
Fidelity cites changing volatility as an indicator of recovery, noting that volatility in digital assets was at its low from June to mid-August before prices began to rise. Bitcoin and other assets had been trading near the bottoms of their crypto history. The breakout was similar to some previous bottoms to bear markets.
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The firm noted that several events during August that some thought would have a negative price impact on crypto, such as a hardware wallet security incident and stalled progress on the CLARITY Act, did not slow the rally. Kuiper said while resilience may strengthen the case that digital assets are close to a bottom, it does not confirm that is the case.
Despite falling prices, indicators of adoption still held strong, including the growth of stablecoin volumes, tokenized real-world assets, and participation from institutional investors, according to Fidelity. However, while this can show persistent network use, it cannot guarantee token price appreciation.
Regulation is another fourth-quarter variable. On August 18, the SEC proposed Regulation Crypto Assets, which would create two registration exemptions for qualifying crypto investment contracts.
Under the proposal, qualifying offerings would be limited to $5 million over a four-year period or $75 million in a 12-month period, subject to certain conditions. The public may comment on the proposal until Oct. 20.
Read More: CLARITY Act Crypto Regulation Impact: How the September Vote Could Reshape the U.S. Crypto Market
For Bitcoin, the fourth quarter is a test. Monetary conditions, institutional interest, adoption and U.S. regulatory developments may be helpful for Bitcoin, but remain insufficient to suggest that the bear market has come to an end.
However, Fidelity warned that while August’s performance suggested a recovery was underway, no confirmation of this trend had been reached.
