Grayscale Says Bitcoin's Bottom Depends on Fed Policy and CLARITY Act

Grayscale's latest report argues that Bitcoin's drawdown this cycle is unlikely to match the 80% declines seen in prior bear markets due to stronger institutional demand and a more mature market structure.

The firm attributes the decline below $60,000 to the unwinding of the 'debasement trade' after markets shifted toward expecting higher interest rates.

According to Zach Pandl, Grayscale's Head of Research, Bitcoin's cycle low depends largely on Federal Reserve policy and whether the CLARITY Act passes the Senate. In Grayscale's base case, the CLARITY Act will pass, Strategy will shore up its balance sheet, and the Fed will hold off on rate hikes, suggesting Bitcoin may already be near a bottom.

Pandl also pointed to structural positives that continue to support the asset class, including an improving regulatory backdrop driving institutional adoption, the recent arrival of US-regulated perpetual futures, and growth in stablecoins and tokenized assets. He noted that current valuations offer compelling entry points for investors with longer-term horizons.