Bitcoin Under Short-Term Pressure Due to 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 hinder the performance of risk assets and bitcoin in the short term, 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 anticipated, posing a substantial challenge for bitcoin. In a report published last week, Thompson expressed his belief that without external support, risk assets will not experience a sustained rally, even with a swift resolution to the Iran situation. He expects U.S. policymakers to take action, potentially through reforms to the supplementary leverage ratio, a significant reduction in the Treasury General Account without offsetting Federal Reserve bill issuance, and a series of rate cuts under a new Fed chair. The SLR is a banking regulation that dictates the amount of capital large banks must hold against their total leverage, while the TGA 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 the TGA drains liquidity. Over the past six months, bitcoin has exhibited sharp 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 decline through the end of the year and into early 2026, with prices falling to around $63,000 by February, a decline of approximately 50% from the peak. This period was characterized by weaker demand, exchange-traded fund outflows, and a risk-off macro backdrop, with BTC 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 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, while the U.S. 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, resulting in short-term pressure on bitcoin 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.