Grayscale: Fed policy may decide if Bitcoin bear ends now

Grayscale Research laid out two scenarios for bitcoin’s recent decline. The firm says the market may already be forming a bottom if the Federal Reserve refrains from further rate hikes and U.S. economic growth remains firm through 2026. If bitcoin instead follows its historical four-year halving cycle, prices could stay weak until September or October.

One scenario follows bitcoin’s past pattern tied to halvings. Grayscale notes prior bear markets reached lows about one year after a cycle peak and roughly two and a half years after a halving, with average peak-to-trough losses near 80 percent. If that pattern repeats, the firm writes, the durable low would likely arrive in late summer or early autumn.

The alternate scenario treats bitcoin more like other risk assets. Grayscale highlights larger institutional flows, the growth of listed investment products and changing monetary conditions as factors that now influence demand. The firm argues these developments lessen the halving schedule’s role as the sole driver of price moves.

Zach Pandl, Grayscale’s head of research, wrote: “If the Fed forgoes rate hikes and economic growth holds up well, bitcoin’s price may already have bottomed.” He added that renewed policy tightening or a sharp slowdown in growth would probably put fresh pressure on risk assets, including bitcoin.

Grayscale said the recent downturn coincided with expectations for tighter policy and a rise in inflation-adjusted yields, conditions that have weighed on risk-sensitive markets. The firm did not rule out further declines and recommended investors consider macroeconomic indicators alongside the halving calendar when assessing near-term risk.

The report describes a shift in how capital enters the bitcoin market. While supply is fixed by code and halvings, price moves are increasingly shaped by the same forces that affect stocks and bonds. Institutional adoption and new investment products have altered market structure, prompting analysts to weigh macro data and on-chain metrics together.

Background: A halving cuts the number of new bitcoins issued about every four years. Historically, halvings have been followed by extended rallies and deep bear markets. Grayscale’s analysis places that history alongside current macroeconomic trends to outline possible timings for a market bottom.