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

According to Russell Thompson, Chief Investment Officer at Hilbert Group, a significant deterioration in global liquidity is imminent, which could impede the growth of risk assets and bitcoin, even if the geopolitical situation in Iran is 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 contraction of 20-25% is on the horizon, posing a substantial challenge for bitcoin in the short term. In a report published last week, Thompson expressed skepticism about the ability of risk assets to sustain a rally without external support, stating, 'Even with a quick resolution in Iran, I do not believe that risk assets will experience a sustainable rally without outside help.' Thompson anticipates that US policymakers will take action, potentially including reforms to the supplementary leverage ratio, a substantial reduction in the Treasury General Account without offsetting Federal Reserve bill issuance, and a series of rate cuts under a potential new Fed 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 is the US 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 drains liquidity. Over the past six months, bitcoin's performance has been marked by intense volatility, reflecting a shift from the exuberance of 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 plummeting to approximately $63,000 by February, a drop of around 50% from the peak. This period was characterized by weaker demand, exchange-traded fund outflows, and a more risk-averse macro environment, with BTC underperforming equities in some instances. Currently, bitcoin is trading around $75,600, significantly off its peak but no longer in free fall. The last six months have seen a full cycle, from peak euphoria to a deep correction, and now a tentative stabilization phase, with macro liquidity, policy expectations, and investor positioning 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. 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 argues that markets are overly focused on the Federal Reserve as the primary source of liquidity, but the US Treasury has significant capacity to inject funds into both the real economy and financial markets. With Treasury leadership experienced in deploying such tools, he expects a more proactive approach. The outcome is short-term pressure on bitcoin, but improving conditions over the medium term. Thompson predicts that bitcoin will 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.