Bitcoin May Have Already Bottomed—If the Fed Helps, Says Grayscale

Crypto asset manager Grayscale published a note Wednesday with a headline argument: Bitcoin's bear market may already be over—if the Federal Reserve doesn't raise rates.

The firm’s head of research, Zach Pandl, essentially laid out what he views as two competing narratives that potentially explain the state of the Bitcoin market today. The first, which he dismisses, is the “four-year cycle” view.

“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, he wrote. The Bitcoin halving is an event baked into Bitcoin’s code that slices mining rewards in half, essentially slowing the cryptocurrency’s rate of inflation, approximately every four years.

“The four-year cycle theory implies that Bitcoin’s price could fall further, with a bottom in September or October,” Pandl wrote.

With Bitcoin currently trading around $65,000, that would suggest a roughly 15% drop from its current price to come.

Bitcoin, though, has climbed more than 10% from its early-July low of $57,717, and spot ETFs—exchange-traded funds backed by actual Bitcoin and accessible through standard brokerage accounts—have logged nearly $1 billion in net inflows over seven straight sessions. On the other hand, it is still on a weakening monthly bearish trend that can easily extend a couple months in the future.

Under the four-year model, Pandl writes, "historically, Bitcoin's price has bottomed about a year after the cyclical peak and roughly 2.5 years after the halving event. Cumulative drawdowns have averaged ~80%." If that holds, as the charts show, the upcoming months could take Bitcoin near $50,000 before gaining in value again.

Exchange-traded product issuer 21Shares, which predicted the four-year cycle would be over by now, conceded in June that "price action still looks familiar." CryptoQuant put the true bear market floor at $55,000 in February, based on the realized price at the time.

Grayscale doesn't buy it. Pandl's alternative: Bitcoin has matured into something that trades more like gold or a rate-sensitive tech stock than a speculative retail asset. Past bear markets, the report notes, have coincided with slowing economic growth and rising real interest rates—the actual return on bonds after stripping out inflation.

"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."

Bitcoin peaked at around $126,000 in October 2025 and still sits roughly 49% below that. The nomination of Kevin Warsh as Fed chair—the hawkish pick that rattled the debasement trade that had fueled Bitcoin's bull run—triggered a sharp reversal. Bitcoin briefly fell below $58,000 in early July before bouncing back.

The flip side is that the recovery could come just as fast. "If the Fed forgoes rate hikes and economic growth holds up well, Bitcoin’s price may already have bottomed," Pandl writes. Grayscale's key takeaway: "The 'four-year cycle' view predicts lower lows for Bitcoin's price, but a macro perspective suggests the bottom may already be in."

There's a second wildcard: The Clarity Act—a sweeping crypto market structure bill that would divide regulatory oversight between the SEC, which polices securities and investment products, and the CFTC, which oversees commodity derivatives. If the bill advances in the Senate and is signed into law, there is a withheld belief among market participants that Bitcoin, and the rest of crypto, could bounce.

Bitcoin is trading lower today than it was yesterday, but is up roughly 4% in the last 30 days. The Fed announces its next rate decision in six days.