Bitcoin May Face Short-Term Challenges Amid Tightening Liquidity, According to Hilbert Group CIO

According to Russell Thompson, Chief Investment Officer at Hilbert Group, a sharp decline in global liquidity is imminent, which could negatively affect risk assets and bitcoin, even if the current geopolitical tensions in Iran are resolved quickly. Thompson notes that while the rollout of the reserve maturity program has stabilized liquidity conditions in some areas of the financial sector, a broader tightening of 20-25% is expected, posing a significant challenge for bitcoin in the short term. Despite this, Thompson believes that U.S. policymakers will intervene with measures such as reforming the supplementary leverage ratio, reducing the Treasury General Account, and implementing rate cuts under a potential new Fed chair. The performance of bitcoin over the past six months has been marked by high volatility, shifting from a state of exuberance to a more fragile market driven by macroeconomic factors. After reaching an all-time high above $126,000 in October 2025, bitcoin experienced a sustained decline, falling to around $63,000 by February 2026, a drop of approximately 50% from its peak. Currently, bitcoin is trading around $75,600, significantly lower than its peak but no longer in a state of free fall. The last six months have seen a complete cycle, from peak euphoria to a deep correction and now a tentative stabilization phase, with macro liquidity, policy expectations, and investor positioning being the primary drivers. Advances in crypto regulation may also provide support, with Thompson anticipating legal clarity on key measures before the summer recess and a faster-than-expected expansion of the Fed's balance sheet as disinflationary pressures build. He argues that higher oil prices could ultimately weigh on growth, while a softening labor market and emerging stress in private credit may add to the disinflationary backdrop. Thompson believes that markets are overly focused on the Federal Reserve as the primary source of liquidity, but the U.S. Treasury has significant capacity to inject funds into both the real economy and financial markets. As a result, Thompson expects short-term pressure on bitcoin but improving conditions over the medium term, with bitcoin likely to be 'significantly higher' by the end of the year as liquidity dynamics evolve.