5 Things That Smart Money Thinks Could End the Crypto Bear Market

Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH), XRP (CRYPTO: XRP), and Solana (CRYPTO: SOL) are all priced well below their late-2025 peaks, and, after months of declining prices, it's clear that right now we're in a crypto bear market. This isn't the first bear market, though, and that's why smart money -- the analysts at Fidelity Investments, to be specific -- made a list of five things that historically have coincided with the end of bear phases.

Most of those factors have already started moving in holders' favor, so let's dive in and take a look at each.

Image source: Getty Images.

What smart money is watching

Bitcoin's four-year cycle is probably the single most important factor that determines when crypto bear markets end. The event that triggers the cycle occurs roughly every four years, when the reward for mining new coin is cut in half.

Its October 2025 peak was right within the band of the 480 to 550-day post-halving window that has bracketed every market top since 2016, and if the same bottoming pattern holds, the cyclical low will arrive between late September and mid-November 2026. If, on the other hand, the coin is already at its low, which is a fairly plausible assertion given the higher-than-ever degree of institutional control of its circulating supply, the rest of the year could be a time of chopping price action rather than declining prices.

Regulation is the next thing outlined by Fidelity, and it's highly salient for the crypto sector at this very moment. New crypto rules have often coincided with a shift from bear to bull in the market. The pending Clarity Act, which would settle which crypto assets fall under the purview of which regulators, has a low but real chance of passing before the end of 2026.

If it's signed into law, it will be a major green light for the bear market to end and for a bull market to begin. XRP, Ethereum, and Solana are more likely to directly benefit from the legislation if it passes than Bitcoin, as they have ecosystems that are highly exposed to regulations and financial compliance issues.

The third important factor is for a big use case to catch on, which is also happening now.

Real-world asset (RWA) tokenization, which is the practice of representing traditional assets like stocks and bonds and debt notes as crypto tokens, is currently responsible for $34.6 billion in on-chain value. So long as more tokenization-related capital inflows to crypto continue, the entire sector will have a tailwind. Again, Solana, Ethereum, and XRP are the most likely beneficiaries of asset tokenization inflows; all three chains are intensely competing to secure their position as the sector's home for different types of tokenized assets.

Institutional capital flows are another thing that's shaping up in the right direction for the bear market to end.

With a $4.5 billion outflow from spot Bitcoin exchange-trade funds (ETFs) in June being quickly reversed with a flood of $510 million of inflows during just three days in early July, the market may have already turned. But, Fidelity itself flags this narrative as no longer being fresh; because most market participants are already pricing in the high institutional capital flows, particularly to the crypto ETFs, it will likely take a lot more money to move the needle on something as broad-based and as fleeting as general investor sentiment.

Where the case is the weakest

The final factor that Fidelity described as contributing to the end of crypto bear markets is a change in monetary policy.

Past crypto bear markets have ended when the Federal Reserve pivots toward slashing interest rates, because rate cuts tend to boost risk assets. But cuts are not what is happening now, and they may not happen for quite a while. The Federal Open Market Committee (FOMC) under the new Chair, Kevin Warsh, left the federal funds rate unchanged in June, stopped offering its forward guidance, and is currently penciling in a hike before the end of the year rather than a cut.

At the same time, the inflation rate is likely to rise further because the Iran war is causing rising energy prices. So, at least for the moment, monetary policy is more likely to be something that prolongs the bear market rather than helps to end it.

Still, investors should keep a close eye on what the Fed does. If past crypto market cycles are any indication, the Fed's first rate cut could well be the starting gun for a new bull market, whenever that may happen.

Alex Carchidi has positions in Bitcoin, Ethereum, and Solana. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Solana, and XRP. The Motley Fool has a disclosure policy.