Key Insights
- Grayscale says Bitcoin recovery depends on Fed policy and the CLARITY Act.
- CLARITY Act delays could keep institutional crypto confidence under pressure.
- Galaxy cut 2026 passage odds to 50% as Senate time runs short.
Grayscale has pushed back against calls for another 80% Bitcoin crash, saying the next cycle low may depend on policy rather than panic. Bitcoin recently slipped below $60,000 after a sharp unwind in hard-asset trades. The asset is now more than 50% below its October peak near $125,000.
Still, Zach Pandl, Grayscale Head of Research, framed the move as a cyclical drawdown inside a longer-term uptrend. His latest note points to two watch items: Federal Reserve policy and the CLARITY Act in the Senate.
Grayscale Frames Bitcoin Recovery Around CLARITY Act Risks
Grayscale said Bitcoin’s base case is not an automatic breakdown. The firm sees a path in which Bitcoin may already be near its low if several risks ease together.
That view depends on the CLARITY Act clearing the Senate. It also depends on Strategy improving its balance sheet and the Fed avoiding fresh rate hikes.
Pandl said the selloff followed a reversal in the “debasement trade.” That trade had supported Bitcoin, gold, and silver as investors hedged against currency weakness.
The shift came as markets moved toward higher-rate expectations. A tighter Fed path can lift dollar yields and reduce demand for risk assets.
Gold also corrected from its highs, which supports Grayscale’s view that Bitcoin was not falling alone. The decline looked more like a broad repricing across hard assets.
CLARITY Act Delay Keeps Institutions on the Sideline
The CLARITY Act remains central to the Bitcoin recovery debate because it could reshape U.S. crypto rules. The bill is designed to clarify when digital assets are treated as securities, commodities, or other instruments.
That legal line matters for exchanges, funds, developers, and public companies. Without clearer rules, large investors may keep risk limits tight.
The bill advanced through the Senate Banking Committee on May 14 with a 15-9 vote. Reuters reported that all Republicans supported it, alongside two Democrats.
However, the floor path remains uncertain. Galaxy Research’s Alex Thorn cut the firm’s 2026 passage odds for the CLARITY Act from 60% to 50%, citing the Senate calendar.
Thorn said the downgrade was mainly about timing. No floor vote has been set, and no unified Banking-Agriculture text has been released.
Open issues still include ethics rules and developer-protection language. Other bills also compete for Senate time before the late July recess.
Grayscale Sees Fed Policy as the Next Liquidity Test
Grayscale’s downside case needs both triggers to hit. The CLARITY Act would stall, while the Fed would raise rates due to sticky inflation.
That mix could pressure Bitcoin further. Higher rates tend to pull capital toward Treasurys and away from speculative assets.
The firm does not present that case as its main forecast. It describes it as a conditional scenario that investors can track through policy signals.
A Senate schedule by early July would improve the legislative outlook. Fed statements, inflation data, and rate projections will shape the macro side.
Pandl also argued that an 80% collapse looks less likely than in older cycles. He cited a milder bull market and stickier institutional demand.
That argument matters because Bitcoin ETFs and treasury firms changed market structure. Their flows can still hurt price, but they also create deeper demand during stress.
Apart from the CLARITY Act, Grayscale also pointed to longer-term support from stablecoins, tokenization, regulated perpetual futures, and rising demand for digital rails. Those themes do not remove near-term risk. They do give investors a clearer map for judging whether Bitcoin recovery can hold.
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