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

A sharp deterioration in global liquidity is anticipated by Russell Thompson, Chief Investment Officer at crypto asset manager Hilbert Group, who notes that even a swift resolution to the geopolitical situation in Iran may not be enough to sustain a rally in risk assets without support from policy makers. Following the introduction of the reserve maturity program, liquidity conditions have stabilized in certain parts of the financial sector, according to Thompson. However, he forecasts a broader tightening of 20-25%, which could pose a substantial challenge for bitcoin in the short term. Thompson expressed his doubts about the ability of risk assets to experience a sustained rally without external assistance, even if the Iran situation is resolved quickly. He anticipates that U.S. policymakers will take action, potentially including reforms to the supplementary leverage ratio, a significant reduction in the Treasury General Account, and a series of interest rate cuts under a new Federal Reserve chair. The supplementary leverage ratio is a banking regulation that dictates the amount of capital large banks must hold against their total leverage, while the Treasury General Account serves as the U.S. Treasury's primary cash account at the Federal Reserve. When the Treasury draws down the TGA, it effectively injects liquidity into the financial system, whereas building up the TGA has the opposite effect. Over the past six months, bitcoin's performance has been marked by significant volatility, shifting away from the exuberance seen in late 2025 to a more fragile, macro-driven market. After reaching an all-time high above $126,000 in October 2025, bitcoin experienced a sustained decline through the end of the year and into early 2026, with prices falling to around $63,000 by February, representing a decline of approximately 50% from its peak. This period was characterized by weaker demand, outflows from exchange-traded funds, and a more risk-averse macro environment, with bitcoin underperforming equities at times. Currently, bitcoin is trading around $75,600, which is 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 finally to a tentative stabilization phase, with macro liquidity, policy expectations, and investor positioning now driving the market. Advances in crypto regulation could 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 argued that higher oil prices could ultimately weigh on growth, while a softening labor market and emerging stress in private credit may contribute to the disinflationary backdrop. Thompson noted 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. With experienced Treasury leadership in deploying such tools, he expects a more proactive approach. As a result, bitcoin is likely to face short-term pressure but improving conditions over the medium term. Thompson expects bitcoin to be significantly higher by the end of the year as liquidity dynamics evolve, and even in a more protracted scenario, he sees liquidity bottoming around 2027, a timeline that could coincide with fresh all-time highs.