Grayscale: Bitcoin Bear Market May Be Over If Fed Holds Off Rate Hikes

Crypto asset manager Grayscale published a note arguing that Bitcoin's bear market may already be over. According to their head of research, Zach Pandl, this is conditional on the Federal Reserve holding off further rate hikes.

The firm rejects the traditional four-year cycle framework, which would predict a bottom in September or October with an average 80% drawdown. Instead, Grayscale views Bitcoin as a macroeconomic asset that trades more like gold or a rate-sensitive tech stock than a speculative retail asset.

Pandl notes that past bear markets have coincided with slowing economic growth and rising real interest rates. The current bear market has also featured a major shift in Fed policy expectations and rising real interest rates, which could be driving Bitcoin's price movements.

The Federal Reserve meets July 29, and the Clarity Act faces an August 7 Senate deadline, both of which are framed as key price catalysts for Bitcoin. If the Fed forgoes rate hikes and economic growth holds up well, Bitcoin's price may already have bottomed.