Fed Policy Expectations Drive Divergence Across Markets
Grayscale Investments is tying bitcoin’s lag behind equities to a repricing of Federal Reserve policy, arguing that bitcoin could narrow the performance gap with stocks if the Fed holds off on rate hikes. In a June 22 research note, the crypto asset manager said changing rate expectations have contributed to the divergence between equities, bitcoin, and gold.
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, bitcoin has fallen 1%, while gold has 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 Committee voted 12-0 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 said inflation remained above its 2% goal, with energy prices contributing to inflation pressure. 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 persistent inflation pressures with higher borrowing costs.
Grayscale Sees Bitcoin as Both Monetary Asset and Growth Exposure
Interest-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 as bitcoin and gold.
Grayscale argued that bitcoin occupies 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 public blockchain networks and the broader crypto ecosystem.
Pandl noted:
“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.”
That framework places bitcoin between two investment categories that respond differently to macroeconomic developments. Gold typically 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 in bitcoin and gold aligns with changing rate expectations. Equities have been supported by AI-related investment.
