Bitcoin may have already reached its bear-market bottom if the Federal Reserve avoids further rate hikes and economic growth holds up, according to Grayscale.
Grayscale says Bitcoin‘s price is now driven more by interest rates and economic growth than by its traditional four-year cycle, suggesting the latest bottom may already be in.
Zach Pandl, Grayscale’s head of research, said in a Wednesday research note that investors are increasingly split between two explanations for when the current downturn might end.
The first relies on Bitcoin’s familiar four-year cycle. Under that framework, Bitcoin has historically bottomed roughly a year after its cyclical peak and about two and a half years after a halving.
Past drawdowns have also averaged around 80%, suggesting Bitcoin could still fall further before reaching a bottom in September or October. Grayscale, however, doesn’t think that is the best way to view the market anymore.
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“Bitcoin’s Price May Already Have Bottomed”
The crypto manager argues that Bitcoin has matured into a macro asset whose price increasingly responds to economic growth, real interest rates and Federal Reserve policy, much like stocks, bonds and other large asset classes. Pandl wrote:
“The current bear market has also featured a major shift in Fed policy expectations and rising real interest rates. Naturally, if macro factors are in the driver’s seat, Bitcoin’s price could bottom when these macro factors turn around.”
Pandl added that Grayscale favored the macro view and believed “Bitcoin’s price may already have bottomed” if the Fed avoided further rate hikes and economic growth remained resilient.
As of press time, Bitcoin was trading near $65,400, up 0.4% on the day, according to Bitcoin Foundation’s price tracker.
The move comes as Bitcoin consolidates after rebounding from below $58,000. Still, Glassnode analysts warned that a growing share of price-sensitive capital could make the next selloff more volatile if momentum fades or selling pressure returns.
Read more: Bitcoin Bottom Begins to Form as Holder Capitulation Slows, Glassnode Says
