Summary
- Zach Pandl, Grayscale's head of research, indicated in a note published Wednesday that Bitcoin might have already reached its lowest point in this cycle, contingent on the Federal Reserve refraining from additional rate hikes.
- The company dismisses the conventional four-year cycle theory, which anticipates a bottom in September or October with an average decline of 80%, instead advocating for a perspective that views Bitcoin as influenced by macroeconomic factors.
- The Fed's meeting on July 29 and the Senate deadline for the Clarity Act on August 7 are identified by Grayscale as significant upcoming events that could impact Bitcoin's price.
On Wednesday, Grayscale released a note asserting that the bearish trend for Bitcoin might have concluded—if the Federal Reserve does not proceed with increasing interest rates.
According to Zach Pandl, the firm's head of research, there are two contrasting narratives about the current state of the Bitcoin market. The first narrative, which he rejects, is the “four-year cycle” perspective.
"Advocates of the ‘four-year cycle’ theory view Bitcoin halving events as pivotal for price fluctuations and expect the current bear market to mirror those of the past," he stated. The Bitcoin halving, encoded into Bitcoin's system, occurs approximately every four years and reduces mining rewards by half, effectively decreasing the cryptocurrency's inflation rate.
"This theory suggests Bitcoin's price could decline further, potentially hitting a low in September or October," Pandl elaborated.
With Bitcoin's current trading value around $65,000, this could imply a further drop of about 15% from its existing price.
Despite this, Bitcoin has gained over 10% since its low of $57,717 earlier in July, and spot ETFs—exchange-traded funds that are backed by actual Bitcoin—have seen nearly $1 billion in net inflows over the past week. However, Bitcoin still faces a weakening bearish trend that may persist for a few months.
According to the four-year model, Pandl noted, "historically, Bitcoin's price has bottomed approximately a year after a cyclical peak and around 2.5 years post-halving. The average cumulative drawdown has been roughly 80%." If this trend continues, it could indicate that Bitcoin might approach $50,000 in the coming months before experiencing a price increase again.
21Shares, an issuer of exchange-traded products, acknowledged in June that their prediction of the four-year cycle ending by now was incorrect, stating "the price action still appears familiar." CryptoQuant established the bear market's true floor at $55,000 back in February, based on the realized price at that time.
Grayscale disagrees with this assessment. Pandl proposes an alternative view: Bitcoin has evolved to behave more like gold or a technology stock sensitive to interest rates rather than merely a speculative asset. The report indicates that previous bear markets have coincided with economic slowdowns and rising real interest rates—the yields on bonds adjusted for inflation.
"The current bear market has also seen a significant change in expectations regarding Fed policy and increasing real interest rates," Pandl explained. "Thus, if macroeconomic factors are the main drivers, Bitcoin's price might bottom out when these factors shift positively."
Bitcoin reached a peak of approximately $126,000 in October 2025 and is currently about 49% lower than that level. The nomination of Kevin Warsh as Fed chair—a decision that unsettled the market—triggered a notable decline, causing Bitcoin to briefly dip below $58,000 in early July before it rebounded.
Conversely, the recovery could occur swiftly. "If the Fed refrains from raising rates and economic growth remains robust, Bitcoin’s price may already have found its low," Pandl noted. Grayscale's main conclusion: "While the 'four-year cycle' perspective anticipates lower lows for Bitcoin, a macroeconomic viewpoint suggests that the bottom may already have been reached."
Another significant factor is the Clarity Act, a comprehensive bill aimed at establishing a regulatory framework for the crypto market, which would delineate oversight responsibilities between the SEC and the CFTC. Should this legislation progress in the Senate and become law, many market participants believe it could lead to a rebound in Bitcoin and other cryptocurrencies.
Currently, Bitcoin is trading lower than it was the previous day, but it has increased by about 4% over the past month. The Federal Reserve will announce its next interest rate decision in six days.