Fidelity Warns Bitcoin Bear Market May Not Be Over Despite Strong ETF Inflows

Bitcoin delivered its best month in about two years, but Fidelity told investors not to assume the worst is over. In its fourth-quarter crypto market outlook, the asset manager said August's rally does not prove the current Bitcoin bear market has run its course, even with the strong ETF flows saying otherwise.

Bitcoin’s four-year cycle theory may be bogus, Fidelity says

The BTC price gained over 25% in the third week of August, marking its strongest monthly performance since November 2024. The gains came after a quiet period from June to mid-August.

There’s been some debate on BTC’s history of forming highs and lows in four-year intervals. The asset's last bear-market bottom came in November 2022, and applying that same interval would put the next low around November 2026. Some experts have opined that date could be a test for whether the Bitcoin bear market has ended.

However, Fidelity said this should not be the determining factor. Chris Kuiper, vice president of research at Fidelity Digital Assets, noted that the cycle has never played out on a precise schedule and should not be used to time exact entries or exits. 

He said this cycle's low may have already formed back in July, but also added that it's equally possible the market sets a new low in November.

"Despite the recent push higher in price, there is no guarantee the bear market is over," Fidelity said in the report.

Fundamentals hold steady as price lagged

Fidelity pointed to a few signs suggesting demand has stayed up even during the Bitcoin bear market. Stablecoin transaction volumes and real-world asset tokenization kept growing even as the total crypto market cap fell.

Kuiper also highlighted how the market was not affected by negative news like the Coldcard hardware wallet hack and delays in the CLARITY Act. He said that resilience suggests sellers are losing steam. 

"The more important point for investors is that adoption of digital assets has happened in waves, which can perpetuate cycles," Kuiper said.

Meanwhile, Senate lawmakers plan to meet for a procedural vote in mid-September that will determine the fate of the CLARITY Act.

BTC ETF inflows return after brief pause

Spot Bitcoin ETFs pulled in $731 million on September 3, led by BlackRock's IBIT fund with $454 million, according to SoSoValue data. This comes after a $101.15 million inflow the day before that reversed a $236.5 million outflow

Bitcoin ETF daily inflows. Source: SoSoValue

This builds on August’s strong performance, which saw $3.52 billion in total inflows.  As of press time, total net assets for Bitcoin ETFs sit at $103.34 billion, with cumulative inflows reading $55.44 billion.

Not everyone shares Fidelity's caution. Strategy’s CEO Phong Le recently shared that the market is entering a “pretty heavy bull market” as the firm resumes its Bitcoin buying. Arthur Hayes also shared a similar view in a recent Substack note as Bitcoin trades near $81,000.