Grayscale: Bitcoin May Have Already Bottomed If the Fed Pauses Rate Hikes

Grayscale Research head Zach Pandl says Bitcoin's worst phase may already be over—provided the Federal Reserve is done raising rates. Two frameworks for calling the end of the bear market Grayscale lays out two competing ways to judge when a cycle low might form: • The "cycle" framework: Historically, Bitcoin bottoms roughly one year after a cycle peak and around 2.5 years after each halving. Prior downturns have produced average peak-to-trough drawdowns near 80%. Applied to the current cycle, that pattern suggests more downside, with a potential low in September or October—possibly well below the $60,000 level BTC recently traded through. • The "macro" framework (Pandl's preferred view): Bitcoin is increasingly trading like a mature macro asset, moving with growth expectations, real interest rates and central-bank policy. If Fed tightening ends and growth remains stable, the macro-driven low could already be in, even if the four-year cycle model implies a longer downturn. Why Pandl leans macro Pandl argues institutional adoption has reshaped Bitcoin's market behavior. With more allocators and corporate treasuries holding BTC, macro forces—especially Fed policy and real borrowing costs—carry more weight than strict halving-timing patterns. Put simply, Bitcoin is moving more like the broader market. Three conditions Grayscale says would help confirm a bottom In a June note, Grayscale highlighted three factors it viewed as pivotal to securing a cycle low: 1) Progress on federal market-structure legislation for digital assets, the so-called CLARITY Act. 2) Improved balance-sheet stability at MicroStrategy, the largest corporate Bitcoin holder. 3) A Fed pause in rate hikes. Grayscale's base case assumed the bill would clear the Senate, MicroStrategy would strengthen liquidity, and the Fed would avoid further hikes. If those conditions hold, Grayscale sees a lower probability of another severe drawdown. If they fail—if CLARITY stalls, treasuries keep deleveraging, or inflation forces additional tightening—Pandl says further downside remains possible. CLARITY Act: pathway and political risk The CLARITY Act would establish a federal market-structure framework and rules for exchanges, developers and token issuers. Grayscale previously noted the bill reached the Senate calendar after committee approval, but it still requires floor debate, potential amendments and 60 votes. Passage this year is not assured. MicroStrategy's sale and why it matters Fears of forced selling by large corporate holders rose after Bitcoin fell below $60,000, as ETF outflows and leveraged liquidations added pressure. Since Grayscale's June note, MicroStrategy sold 3,588 BTC for about $216 million. Grayscale characterizes the move as stabilizing: the proceeds covered preferred-share dividend obligations and lifted MicroStrategy's dollar reserve to about $2.55 billion—enough to fund nearly 17 months of dividend payments under then-current obligations. Grayscale says the larger cash buffer reduces the risk of emergency financing needs or additional forced Bitcoin sales. Under MicroStrategy's updated treasury framework, the company can issue equity or sell BTC to maintain dollar liquidity for dividends, steps Grayscale believes reduce balance-sheet uncertainty. The announcement initially pushed BTC toward $61,000 before prices recovered above $63,000. Bottom line Pandl's constructive case is straightforward: if the Fed stops hiking while growth holds up—and political and corporate balance-sheet risks ease—Bitcoin may already have set its floor. The view depends on those macro and policy outcomes. If inflation forces more tightening, growth weakens, or legislative progress stalls, the current low could prove temporary and a deeper selloff could follow.