Grayscale Says Fed Pause Could Help Bitcoin Close Stock Gap

Bitcoin has not joined the equity rally. Grayscale says that gap has more to do with interest rate expectations than weak demand for Bitcoin itself.

Good to know

• Bitcoin is down 1% since the Iran war began in late February, while U.S. stocks are up 9%, according to Grayscale.
• Gold has dropped 20% over the same stretch.
• Grayscale says Bitcoin could recover ground if the Fed avoids new rate hikes.

Stocks Ran On AI While Bitcoin Traded Like A Rate Asset

Grayscale sees two different forces driving markets right now. Stocks have had help from artificial intelligence spending, while Bitcoin and gold have had to deal with higher expected real yields.

That split has created a wide gap between major macro assets. U.S. equities have gained 9% since the Iran war began in late February, supported by AI infrastructure and technology investment. Bitcoin has fallen 1%. Gold has dropped 20%.

For Bitcoin holders, the comparison matters because Bitcoin often trades between two categories. It can act like a scarce monetary asset, similar to gold. It can also act like growth exposure because it links to public blockchain activity and the wider crypto market.

Grayscale Head of Research Zach Pandl said that mix still makes Bitcoin useful in portfolios.

“That makes bitcoin’s function similar—but not exactly the same—to that of gold and growth equities in portfolios. If so, bitcoin can act as a portfolio diversifier that, at current levels, appears attractively priced.”

Rate Expectations Are The Main Drag

The pressure came from the bond market, not only from crypto trading. One year Fed rate expectations have increased by around 60 basis points since late February. Around half of Federal Reserve officials now see rate increases as possible in 2026.

Higher rate expectations usually hurt assets that do not produce income. Cash and bonds become more attractive when real yields rise, so investors demand more reason to hold Bitcoin or gold.

Pandl said Grayscale base case still avoids that outcome.

“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.”

The Fed kept rates unchanged on June 17, with the Federal Open Market Committee voting 12-0 to hold the federal funds rate at 3.5% to 3.75%. The meeting was Kevin Warsh first as Fed chair. Officials said inflation remained above the 2% target, with energy prices adding pressure.

The next Fed rate meeting is scheduled for July 28 and July 29, 2026.

Bitcoin Still Sits Between Gold And Growth Stocks

Gold weakness shows how much rates have mattered. A 20% drop in gold suggests investors have not rewarded traditional monetary hedges while the market prices tighter policy.

Bitcoin has held up better than gold, but it has still lagged equities. Grayscale argues that Bitcoin should not be judged only as digital gold. It also gives investors exposure to crypto networks, blockchain usage, and long term technology adoption.

That is where the catch up argument comes in. Stocks have already priced in strong AI spending. Bitcoin has not received the same benefit from crypto growth themes because rates have dominated the market.

A steady Fed could change that setup. No rate hikes would lower one major headwind for Bitcoin, while leaving the long term scarcity and blockchain growth case intact.

Central banks outside the U.S. add another layer. The European Central Bank has already raised rates, showing that inflation pressure remains a global issue. Still, Grayscale view depends most on whether the Fed keeps U.S. policy steady from here.