Grayscale: Bitcoin may have bottomed, Fed policy key

A leading digital asset manager has suggested Bitcoin may have already reached its cyclical low, challenging the widely held belief that its price is dictated by a rigid four-year pattern tied to its halving events. In a research note published on Wednesday, July 22, Grayscale's head of research, Zach Pandl, argued that macroeconomic factors, particularly Federal Reserve policy, are now the primary drivers for the cryptocurrency.

Pandl's analysis presents two competing views of the current bear market. The traditional four-year cycle model, based on historical patterns, suggests Bitcoin could face further selling pressure before finding a bottom in September or October of this year. This view notes that past bear markets have seen average declines of roughly 80% from cycle peaks. However, Grayscale endorses a second perspective, which sees Bitcoin behaving more like a mature macro asset. From this viewpoint, if the Fed refrains from further interest rate hikes and U.S. economic growth remains resilient, Bitcoin may have already bottomed, potentially establishing a cycle low as early as September or October.

The firm's argument hinges on Bitcoin's increasing correlation with...