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

Fidelity said Bitcoin’s four-year cycle, regulatory changes, a shift in monetary policy, new use cases and broader institutional adoption could help bring the crypto bear market to an end.

In a report released on June 30, Fidelity wrote that several factors have historically helped spark new crypto bull markets. Still, it said the reappearance of those conditions would not guarantee another rally.

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 2026, but is now back below $69,000, the peak reached during the 2019-2021 bull market.

The firm said there is room for debate over whether the market is technically in a bear phase. In past Bitcoin bear markets, prices fell at least 77% from their peaks, while the low reached in June 2026 was down about 53% from the previous high. Even so, Fidelity said the bullish mood had largely 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 cycle low came in November 2022.

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

The second variable is regulatory change. Fidelity said crypto-friendly regulation has at times helped launch or extend bull markets. It cited the New York State Department of Financial Services’ virtual-currency licensing regime as a factor in restoring market confidence at the start of the 2015 rally, and said the US Securities and Exchange Commission’s approval of spot Bitcoin exchange-traded products in 2024 supported Bitcoin’s climb to fresh records.

Among the bills now in focus, Fidelity pointed to the US Clarity Act. The legislation aims to establish a legal framework for the US digital-asset market. If passed, it could reduce uncertainty for crypto businesses in the US. As of June 2026, Fidelity said, the bill was still being discussed 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 widely treated as risk assets, lower rates and easier liquidity conditions can lift investor appetite for risk.

Expectations for higher rates, by contrast, have weighed on Bitcoin. Fidelity said some investors still see a chance of rate increases later in 2026 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 non-fungible tokens and meme coins drew broad public attention during the 2019-2021 bull market and helped bring new investors into crypto.

Areas now drawing attention include 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 blockchain networks. Stablecoins are digital assets designed to track the value of fiat currencies such as the dollar, and Fidelity said adoption has accelerated since the Genius Act in 2025.

AI-related crypto assets are tied to use cases such as 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 expecting.

The fifth variable is broader institutional adoption. Fidelity said one factor behind the 2020 bull market was a wave of publicly traded companies announcing plans to add Bitcoin to their balance sheets. It also said the 2024 approval of spot Bitcoin ETPs and the US announcement in 2025 of a strategic digital-asset reserve helped drive Bitcoin to new all-time highs.

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

Fidelity said it cannot predict when the crypto bear market will end. The report said one of those 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 the crypto market still has long-term tailwinds, including wider stablecoin adoption. It added that investors should keep in mind that digital assets are highly volatile, can be vulnerable to market manipulation, and do not carry protections such as deposit insurance or investor-protection programs for securities holders.