Bitcoin Could Rally if Fed Keeps Rates Steady, Grayscale Says
Bitcoin’s recent underperformance relative to equities has coincided with rising Federal Reserve rate expectations, and Grayscale Investments arguesbitcoincould narrow that gap if policymakers hold off on. . .
Bitcoin’s recent underperformance relative to equities has coincided with rising Federal Reserve rate expectations, and Grayscale Investments arguesbitcoincould narrow that gap if policymakers hold off on rate hikes. Key TakeawaysFederal Reserve rate expectations are widening performance gaps between bitcoin, equities, and gold, making monetary policy a key factor in recent market moves. Equities are up 9%, while bitcoin is down 1% and gold has fallen 20%, a period that coincided with rising rate expectations. Grayscale says bitcoin combines monetary traits with blockchain growth exposure, positioning it as a scarce digital commodity and diversifier. Fed Policy Expectations Drive Divergence Across MarketsGrayscale Investments is tyingbitcoin’s lag behind equities to a repricing of Federal Reserve policy, arguing thatbitcoincould narrow the performance gap with stocks if the Fed holds off on rate hikes. In a June 22 research note, thecryptoasset manager said changing rate expectations have contributed to the divergence between equities,bitcoin, andgold. U. S. equities have gained 9% since the start of the Iran war in late February, supported in part by sustained spending tied to artificial intelligence infrastructure and development, Grayscale detailed. Over the same period,bitcoinhas fallen 1%, whilegoldhas dropped 20%, creating one of the widest performance gaps among major macro assets. Grayscale Investments Head of Research Zach Pandl said:“Our base case is for the Fed to hold off on rate hikes. If we’re right,bitcoin’s price may catch up with stocks. ”Investor expectations for monetary policy have shifted toward tighter conditions. One-year Fed rate expectations have risen by about 60 basis points since late February, and roughly half of Federal Reserve officials now indicate that rate increases could be warranted in 2026. The Federal Open Market Committeevoted12-0 on June 17 to keep the federal funds rate at 3. 5% to 3. 75% in Kevin Warsh’s first policy meeting as Fed chair. The Fed saidinflationremained above its 2% goal, with energy prices contributing toinflationpressure. The next Federal Reserve interest rate meeting is scheduled for July 28–29, 2026. Central banks outside the United States have already begun tightening. The European Central Bank (ECB) has already raised interest rates, reinforcing the broader shift toward tighter monetary policy as officials respond to persistentinflationpressures with higher borrowing costs. Grayscale SeesBitcoinas Both Monetary Asset and Growth ExposureInterest-rate expectations carry particular importance for assets that do not generate income. As real yields rise, investors can earn higher returns from cash and fixed-income instruments, increasing the opportunity cost of holding alternatives such asbitcoinandgold. Grayscale argued thatbitcoinoccupies a different position than traditional monetary assets. The firm described the asset as a scarce digital commodity that can function as a long-term store of value while also providing exposure to the growth of publicblockchainnetworks and the broadercryptoecosystem. Pandl noted:“That makesbitcoin’s function similar—but not exactly the same—to that ofgoldand growth equities in portfolios. If so,bitcoincan act as a portfolio diversifier that, at current levels, appears attractively priced. ”That framework placesbitcoinbetween two investment categories that respond differently to macroeconomic developments. Goldtypically trades as a monetary hedge. Growth equities benefit from technology investment and expectations for future earnings. Current pricing reflects those influences. Grayscale says recent weakness inbitcoinandgoldaligns with changing rate expectations. Equities have been supported by AI-related investment.