Key Takeaways
- • Grayscale Research confirms Bitcoin is undervalued on composite on-chain valuation metrics, but the current discount does not match the depth seen at previous cycle lows such as the post-FTX collapse period.
- • Bitcoin has fallen below $60,000 (trading near $62,105 as of the June 9 research note), pushing the asset below its long-term valuation average, yet Grayscale argues this represents a shallow capitulation compared to historical bear markets.
- • Two critical short-term catalysts will determine whether the market has truly bottomed: U.S. regulatory clarity via the CLARITY Act and the performance of large leveraged Bitcoin holders in the near term.
- • Broader institutional adoption through ETFs and a more muted previous bull cycle may result in a shallower drawdown than older market cycles, reducing the need for Bitcoin to reach deeper discount levels before recovery.
- • Galaxy Digital has downgraded the probability of the CLARITY Act passing to 60% from 75%, citing a compressed legislative calendar and unresolved controversies, adding uncertainty to the regulatory catalyst timeline.
Summary
Grayscale Research released an analysis on June 9, 2026, assessing Bitcoin's valuation following a significant price decline to a new cycle low below $60,000. According to Zach Pandl, head of research at Grayscale, Bitcoin's drop has pushed the asset below its long-term valuation average based on the firm's composite on-chain valuation indicator—a measure built from three separate on-chain metrics. This technical framework suggests the market has entered undervalued territory from a fundamental perspective.
However, Grayscale's assessment carries an important qualification: while Bitcoin is currently cheap, it has not yet reached the deeply discounted levels observed at previous cycle bottoms. Pandl specifically referenced the post-FTX collapse period as a benchmark for true capitulation pricing. He noted that whether Bitcoin has hit its market bottom depends on two pivotal factors: the regulatory outlook in the United States and the short-term behavior of large leveraged Bitcoin holders. This framing suggests the current market setup lacks the clean capitulation signal that has historically preceded sustained recovery.
Grayscale attributed the potentially shallower drawdown in the current cycle to structural changes in the Bitcoin market. The firm highlighted that broader institutional adoption through Bitcoin ETFs and increased participation by institutional investors have altered cycle dynamics compared to previous bear markets. Additionally, Grayscale observed that the prior bull market was more muted than historical peaks, potentially reducing the amplitude of the corresponding correction cycle.
On the regulatory front, the CLARITY Act—proposed U.S. Senate legislation designed to establish clearer rules for the crypto industry—has emerged as a key near-term catalyst. However, Galaxy Digital, the cryptocurrency firm owned by Mike Novogratz, recently downgraded the probability of the CLARITY Act's passage to 60% from 75%, citing a compressed Senate calendar and unresolved controversies as headwinds. This regulatory uncertainty adds complexity to the timeline for potential market recovery, as clearer legislative frameworks could bolster institutional and retail confidence in the sector.
However, Grayscale's assessment carries an important qualification: while Bitcoin is currently cheap, it has not yet reached the deeply discounted levels observed at previous cycle bottoms. Pandl specifically referenced the post-FTX collapse period as a benchmark for true capitulation pricing. He noted that whether Bitcoin has hit its market bottom depends on two pivotal factors: the regulatory outlook in the United States and the short-term behavior of large leveraged Bitcoin holders. This framing suggests the current market setup lacks the clean capitulation signal that has historically preceded sustained recovery.
Grayscale attributed the potentially shallower drawdown in the current cycle to structural changes in the Bitcoin market. The firm highlighted that broader institutional adoption through Bitcoin ETFs and increased participation by institutional investors have altered cycle dynamics compared to previous bear markets. Additionally, Grayscale observed that the prior bull market was more muted than historical peaks, potentially reducing the amplitude of the corresponding correction cycle.
On the regulatory front, the CLARITY Act—proposed U.S. Senate legislation designed to establish clearer rules for the crypto industry—has emerged as a key near-term catalyst. However, Galaxy Digital, the cryptocurrency firm owned by Mike Novogratz, recently downgraded the probability of the CLARITY Act's passage to 60% from 75%, citing a compressed Senate calendar and unresolved controversies as headwinds. This regulatory uncertainty adds complexity to the timeline for potential market recovery, as clearer legislative frameworks could bolster institutional and retail confidence in the sector.
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