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Grayscale thinks Bitcoin's current slump might already be close to bottoming out — but only if a handful of key things break the right way in the coming months. In a new market note, the asset manager laid out two distinct scenarios for where the cycle goes from here, with the outcome hinging on three swing factors: the fate of the CLARITY Act in the Senate, the health of Strategy's balance sheet, and whether the Federal Reserve holds steady or resumes raising rates.
Grayscale's base case assumes things break favorably on all three fronts — the bill clears the Senate, Strategy shores up its financial position, and the Fed avoids further hikes. If that combination plays out, the firm believes Bitcoin may already be sitting close to its low for this cycle. But the firm was equally clear about how the picture changes if things go the other way.
“If downside risks materialize, we could see bitcoin fall moderately further,” said Zach Pandl, Grayscale's head of research. He described the weaker scenario as one where the CLARITY Act fails to pass this year, digital asset treasury companies keep deleveraging, and the Fed ends up raising rates because inflation stays stubbornly high.
The note arrives just as Bitcoin has already broken below the $60,000 level amid a broader, sharp pullback across crypto markets. ETF outflows and a wave of liquidations have added to the pressure as traders fight to defend that psychological level. For context, Grayscale pointed out that past Bitcoin bear markets have seen drawdowns around 80% — but the firm doesn't expect this cycle to fall nearly that far, largely because institutional demand has held up noticeably better than in previous downturns.
The CLARITY Act's Path Is Still Far From Settled
Regulatory clarity remains one of the biggest swing factors in Grayscale's outlook. The CLARITY Act would establish a federal market-structure framework for digital assets, giving exchanges, developers, and token issuers a clearer rulebook to operate under than the patchwork that exists today. The bill has cleared committee and made it onto the Senate calendar, but it still needs to get through floor debate, fend off potential amendments, and ultimately clear the 60-vote threshold needed to pass.
That path has been narrowing as the Senate's calendar fills up with competing priorities. Reports on the bill's timeline note that it still requires coordination between the Senate Banking and Agriculture committees before any final floor vote can even begin, and that unresolved disputes — over conflict-of-interest language, stablecoin rules, illicit-finance provisions, and simply finding floor time — remain very much in play.
Grayscale's reading is straightforward: a successful vote would meaningfully reduce policy uncertainty and could open the door to the next wave of institutional participation in crypto. A stalled or failed vote, on the other hand, would leave the market without the clear federal rulebook many investors had been counting on this year — and for Bitcoin specifically, that means regulatory uncertainty stays tangled up with price sentiment for longer, especially in a period where risk appetite is already fragile.
The Fed and Strategy's Balance Sheet Add to the Pressure
The second major risk in Grayscale's downside scenario centers on the Federal Reserve. Recent commentary from Citadel Securities has warned that the Fed could move to raise rates as early as September 2026 if inflation doesn't ease. Separately, reporting on the Fed's own June projections suggests officials have shifted away from expecting rate cuts, with several now anticipating hikes before the year is out.
Higher rates tend to weigh on Bitcoin specifically because, unlike bonds or savings products, it doesn't pay any yield. When the dollar strengthens and real yields climb, cash and Treasuries become relatively more attractive to investors who might otherwise hold riskier assets. That dynamic has already pressured both Bitcoin and gold for stretches of this year, with both assets showing strain whenever the dollar firms up and rates climb.
Strategy — the company long known for its aggressive corporate Bitcoin accumulation strategy — is the third piece of this puzzle. Recent reporting indicates the company's Bitcoin position has fallen roughly $12 billion below its original cost basis since Bitcoin dropped under $60,000, and that its stock, MSTR, has been trading below the actual value of its Bitcoin holdings. Other analysis has described the company's once-celebrated “flywheel” strategy as starting to run in reverse, as the premium investors were once willing to pay for the stock has eroded and financing has become noticeably harder to come by.
Not a Repeat of Past Bear Markets — But Not Risk-Free Either
Importantly, Grayscale isn't forecasting anything resembling the brutal, 80%-plus drawdowns of Bitcoin's earlier bear cycles. Instead, the firm is framing the next move primarily around these three specific pressure points — policy outcomes, interest-rate decisions, and corporate balance-sheet stress — rather than a broader structural collapse.
The bottom line from Grayscale's note is essentially conditional: if the CLARITY Act passes, Strategy manages to stabilize its finances, and the Fed holds off on further hikes, Bitcoin may very well already be near the bottom of this cycle. If those three things go the other way instead, the firm sees room for Bitcoin to fall moderately further from here — not a crash, but a continuation of the pressure the market has already been feeling.
Disclosure: This article is for informational purposes only and does not constitute financial or investment advice. Market conditions can change quickly; always do your own research and consult a financial professional before making investment decisions.
