Crypto asset manager Grayscale published a research note on Wednesday arguing that Bitcoin's bear market may already be over—provided the Federal Reserve refrains from further interest rate hikes. Grayscale, which operates one of the largest spot Bitcoin ETFs, has increasingly positioned its research around Bitcoin's role as a macroeconomic asset.

The note, authored by Grayscale's head of research Zach Pandl, presents two competing frameworks for understanding the current state of the Bitcoin market. The first, which Grayscale rejects, is the widely followed "four-year cycle" theory. The second frames Bitcoin as a mature macroeconomic asset whose price movements are driven primarily by monetary policy and broader economic conditions.

The Four-Year Cycle View

Under the four-year cycle framework, Bitcoin's halving events—programmed reductions in mining rewards that occur approximately every four years and slow the cryptocurrency's rate of inflation—serve as the primary driver of price movements. Proponents of this theory expect the current downturn to mirror previous bear markets.

"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," Pandl wrote.

Historically, under this model, Bitcoin has bottomed roughly one year after its cyclical peak and approximately 2.5 years after the halving event, with cumulative drawdowns averaging around 80%.

"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, such a scenario would suggest an additional decline of approximately 15%. If historical patterns hold, the coming months could take Bitcoin near $50,000 before a recovery takes hold.

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

Grayscale's Macroeconomic Alternative

Grayscale dismisses the four-year cycle framework in favor of viewing Bitcoin as an asset that has matured to trade more like gold or a rate-sensitive technology stock than a speculative retail investment. The comparison to gold is notable: during periods of negative real interest rates, both gold and Bitcoin have historically benefited as investors sought stores of value outside depreciating fiat currencies. Past bear markets, the report notes, have coincided with slowing economic growth and rising real interest rates—the actual return on bonds after accounting for 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 approximately $126,000 in October 2025 and currently sits roughly 49% below that level. The nomination of Kevin Warsh as Fed chair—a hawkish selection that disrupted the debasement trade, through which investors bought hard assets like Bitcoin to hedge against currency depreciation from loose monetary policy, fueling Bitcoin's prior bull run—triggered a sharp reversal. Warsh, a former Federal Reserve Board governor known for his inflation-focused stance, signaled a tighter policy posture than markets had anticipated. Bitcoin briefly fell below $58,000 in early July before recovering.

Despite the ongoing bearish monthly trend, Bitcoin has climbed more than 10% from its early-July low of $57,717. Spot Bitcoin ETFs—exchange-traded funds backed by actual Bitcoin and accessible through standard brokerage accounts—have recorded nearly $1 billion in net inflows over seven consecutive sessions, rebounding to around $60,000 amid easing rate hike concerns. The sustained inflows underscore the degree to which institutional capital now flows into Bitcoin through regulated vehicles, reinforcing Grayscale's argument that the asset's behavior increasingly reflects macroeconomic conditions rather than internal cycle mechanics alone.

"If the Fed forgoes rate hikes and economic growth holds up well, Bitcoin's price may already have bottomed," Pandl writes.

Grayscale's central conclusion: "The 'four-year cycle' view predicts lower lows for Bitcoin's price, but a macro perspective suggests the bottom may already be in."

Upcoming Catalysts

Two key events in the coming weeks could significantly influence Bitcoin's trajectory. The Federal Reserve's next rate decision is scheduled for July 29. Additionally, 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—faces an August 7 deadline in the Senate. If the legislation advances and is signed into law, market participants broadly expect a positive impact on Bitcoin and the broader cryptocurrency sector.

The juxtaposition of these two events is itself illustrative of the macro framing: a single rate decision from the Fed may carry more immediate price significance for Bitcoin than a landmark regulatory bill, a dynamic that would have been difficult to imagine in earlier market cycles dominated by crypto-native narratives.

Bitcoin is trading lower today than it was yesterday, but remains up roughly 4% over the past 30 days. The Fed is set to announce its next rate decision in six days.