Grayscale Expert: Fed Pause May Mark the Bitcoin Bottom
Bitcoin’s Recent Drop and What It Means
Bitcoin has dropped more than half from its high of $125,000. Many traders worry about more pain ahead. But one expert from Grayscale thinks the bottom might already be in place if the Federal Reserve stops raising interest rates.
Two Ways to Look at Bitcoin Cycles
Grayscale Research sees two main ideas for when the bear market ends. One follows the usual four-year cycle. The other looks at the economy, real interest rates, and what the Fed does. Zach Pandl, who leads research at Grayscale, likes the second view more. He says Bitcoin now acts like a grown-up asset that moves with big economic forces.
If the economy stays steady and the Fed pauses on rate hikes, the latest low could hold. Pandl notes that Bitcoin trades with macro variables like growth and policy expectations. This means a Fed pause could mean the
The Cycle View vs the Macro View
The cycle model is not as hopeful. In past rounds, Bitcoin hit bottom about one year after the peak and two and a half years after a halving. Drawdowns often reached 80 percent. That path would point to a low in September or October, with prices falling much lower than the recent drop under $60,000.
Yet Grayscale does not expect an 80 percent crash this time. More big investors are involved now. This makes macro conditions more important than old halving patterns. Past bear markets lined up with slow growth or rising real rates. The current drop happened while people expected more Fed tightening.
What Happens If Rates Stay Flat
If the Fed finishes hiking and growth stays okay, Bitcoin may not need another big fall. But if inflation stays high and rates rise again, the story changes. Grayscale also points to other factors like the CLARITY Act and how firms like Strategy handle their money. Their base case needs the bill to pass, Strategy to fix its balance sheet, and no more rate hikes.
If those things do not happen, more selling pressure could come. Pandl said downside risks could push Bitcoin a bit lower. The CLARITY Act aims to set clear rules for digital assets, exchanges, and issuers. It has moved forward in the Senate but still needs more votes.
Strategy’s Move and Its Impact
Strategy sold some Bitcoin to build cash reserves. Grayscale sees this as a smart step, not a sign of trouble. The sale gave the company a bigger dollar buffer that can cover many months of payments. This lowers the chance of forced selling later and helps create a stronger floor for Bitcoin prices.
The news first lifted Bitcoin toward $61,000 before it moved back above $63,000. Less fear of big sales from a major holder supports the idea that the low may last.
Key Risks That Remain
Pandl’s view still depends on things that are not settled. If inflation forces another hike, growth slows, or policy work stalls, the current low could break. Stable growth and flat rates would back the case that the bottom is already set.
Traders should watch Fed moves closely. A pause could bring relief, while more tightening might test lower levels again. Bitcoin now reacts to the same forces that move stocks and bonds, so macro news will stay key in the months ahead.
