Bitcoin Bear Trend May End If Federal Reserve Halts Rate Hikes

Zach Pandl, head of research at Grayscale Investments, shared his insights on the current state of Bitcoin's price trend. According to him, the bitcoin bear trend may end if the Federal Reserve stops raising interest rates and US economic growth remains resilient.

Pandl compared two approaches to assessing when Bitcoin might exit its prolonged decline: one relying on the four-year cycle and another connected to macroeconomics. In the first scenario, Bitcoin typically finds a bottom about a year after its price peak and roughly two and a half years after each halving. However, in this case, Pandl suggests that the price could go lower and reach a bottom in September or October, considering it's currently trading around $65,000, which is 48% below the October high of $126,198.

Pandl himself leans more towards the second scenario, where Bitcoin behaves like a mature market asset, supported by investments from large companies, and its price reacts to macroeconomic signals. He believes that several conditions are important for a reversal: the market has already partially priced in the risk of further Fed tightening; the Fed stops the rate hike cycle; the US economy does not start to weaken sharply.

This perspective is crucial for investors, as it shifts their focus from short-term market emotion to rate policy, liquidity, and economic resilience. According to Pandl, against this backdrop, Bitcoin may form a bottom and not fall below current levels.