Bitcoin Faces Near-Term Challenges as Global Liquidity Dwindles, Says Hilbert Group CIO

A significant decline in global liquidity is anticipated, as stated by Russell Thompson, Chief Investment Officer at Hilbert Group, a crypto asset management firm. Thompson noted that even a swift resolution to the geopolitical tensions in Iran may not be sufficient to sustain a rally in risk assets without external support. Following the introduction of the reserve maturity program, liquidity conditions have stabilized in certain areas of the financial sector. However, a broader tightening of 20-25% is forecasted, which could pose a substantial challenge for bitcoin in the near term. Thompson expressed his doubts about the ability of risk assets to rally without external assistance, even if the Iran situation is resolved promptly. He anticipates that US policymakers will take action, possibly through reforms to the supplementary leverage ratio, a substantial reduction in the Treasury General Account, 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 has experienced significant volatility, marking 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 entered a prolonged drawdown that lasted through the end of the year and into early 2026. By February, prices had dropped to around $63,000, a decline of approximately 50% from the peak, amid a broader crypto market sell-off and tightening financial conditions. This period was characterized by weaker demand, exchange-traded fund outflows, and a more risk-off macro backdrop, with bitcoin underperforming equities in some instances. Currently, bitcoin is trading around $75,600, significantly off its peak but no longer in freefall. The last six months have seen a full 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. Higher oil prices, he argued, could ultimately weigh on growth, while a softening labor market and emerging stress in private credit may add to the disinflationary backdrop. Thompson noted that markets remain 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. As a result, Thompson forecasts short-term pressure on bitcoin but improving conditions over the medium term. He 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.