Grayscale: Bitcoin's Bear Market May Be Over If Fed Pauses

Grayscale says Bitcoin’s bear market may already be over — but only if the Fed stands down. In a Wednesday note, Grayscale’s head of research Zach Pandl laid out two competing narratives for Bitcoin’s current price action. One is the familiar “four‑year cycle” story tied to Bitcoin’s halvings: believers here expect a deeper drawdown, with a bottom potentially arriving in September or October. With BTC trading around $65,000, that scenario could imply another roughly 15% slide from current levels — and some chart readings even point toward lows nearer $50,000. Historically, Pandl notes, cyclical bottoms have come about a year after the peak and roughly 2.5 years after a halving, with average cumulative drawdowns of about 80%. But Grayscale’s alternative view is more macro-driven. The firm argues Bitcoin now behaves more like gold or a rate‑sensitive tech stock than a purely speculative retail asset. Past Bitcoin bear markets have coincided with slowing growth and rising real interest rates; the current one has featured a sharp shift in Fed expectations and higher real rates. If macro conditions reverse — if the Fed pauses hikes and growth stays solid — Bitcoin’s price may already have put in its low. That’s especially relevant after the October 2025 peak near $126,000; BTC still sits roughly 49% below that high, and the nomination of Kevin Warsh as Fed chair earlier in the cycle helped trigger a sharp reversal by undercutting the “debasement” trade that fueled the bull run. Market signals are mixed. Bitcoin rallied more than 10% from an early‑July low of $57,717 and spot Bitcoin ETFs have seen nearly $1 billion in net inflows over seven straight sessions, suggesting renewed institutional demand. Yet the monthly trend remains bearish and could extend for a few more months. Other analysts differ on floors: exchange‑traded product issuer 21Shares had expected the four‑year cycle to be over by now but admitted price action “still looks familiar,” while on‑chain tracker CryptoQuant placed a perceived bear‑market floor at about $55,000 back in February. There’s also a regulatory wildcard: the Clarity Act, a bill that would split oversight of crypto markets between the SEC (securities and investment products) and the CFTC (commodity derivatives). If the bill advances and becomes law, many market participants expect a positive relief rally for Bitcoin and broader crypto markets. Near term, Bitcoin is down today versus yesterday but is up roughly 4% over the past 30 days. The next Fed rate decision — a potential catalyst for either narrative — arrives in six days. Grayscale’s bottom line: the four‑year cycle calls for lower lows, but a macro view leaves open the possibility that the worst is already behind us.