Grayscale bets on Fed pause to confirm Bitcoin bottom
Grayscale argues Bitcoin has likely hit its cycle floor, shifting focus away from historical patterns and toward upcoming Federal Reserve policy decisions that will dictate the asset's near-term trajectory.
Grayscale has abandoned the cryptocurrency industry's traditional price forecasting model, arguing instead that Bitcoin likely hit its bear-market floor last month provided the Federal Reserve keeps interest rates unchanged. In a Wednesday note, head of research Zach Pandl told clients that the asset now behaves like a rate-sensitive technology stock rather than a speculative retail instrument.
This thesis directly challenges the widely held "four-year cycle" framework, which ties price movements to the halving of mining rewards. "Believers in the 'four-year cycle' theory see Bitcoin halving events as the key driver of price movements and expect the current bear market to play out like those in the past," Pandl wrote. Under that historical model, Bitcoin typically bottoms about a year after its peak with an average drawdown of 80%, which would push the token down to roughly $50,000 by September or October.
Pandl favors a macroeconomic lens. He noted that previous Bitcoin bear markets aligned with slowing 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," Pandl writes. "Naturally, if macro factors are in the driver's seat, Bitcoin's price could bottom when these macro factors turn around."
The market is currently digesting a sharp reversal from its October 2025 peak of roughly $126,000. The nomination of Kevin Warsh as Federal Reserve chair sparked the initial selloff, sending prices briefly below $58,000 in early July. However, the token has since climbed more than 10% from that $57,717 trough, aided by nearly $1 billion in net inflows into spot exchange-traded funds over seven consecutive sessions.
Investors are now looking to two immediate catalysts to validate the macro bottom thesis. The Federal Reserve meets on July 29, with Pandl concluding that "if the Fed forgoes rate hikes and economic growth holds up well, Bitcoin’s price may already have bottomed." Additionally, the Clarity Act—a bill assigning regulatory oversight of crypto assets between the SEC and CFTC—faces an August 7 deadline in the Senate. Passage would provide structural regulatory clarity, offering a secondary boost to prices.
"The 'four-year cycle' view predicts lower lows for Bitcoin's price, but a macro perspective suggests the bottom may already be in," Pandl wrote. For institutional investors, the takeaway is that Bitcoin's trajectory now depends on traditional macroeconomic data and Washington policy rather than on-chain supply mechanics.
