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

According to Russell Thompson, Chief Investment Officer at Hilbert Group, a sharp deterioration in global liquidity is imminent, which could hinder the growth of risk assets, including 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 tightening of 20-25% is on the horizon, posing a considerable challenge for bitcoin in the short term. In a report published last week, Thompson stated that without external support, risk assets are unlikely to experience a sustained rally, even with a swift resolution to the Iran conflict. Thompson anticipates that US policymakers will intervene, potentially through reforms to the supplementary leverage ratio, a substantial reduction in the Treasury General Account, and a series of 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 is the US Treasury's primary cash account at the Federal Reserve. When the Treasury draws down the TGA, it injects liquidity into the financial system, whereas building the TGA drains liquidity. Over the past six months, bitcoin's performance has been marked by significant volatility, shifting from late-2025 exuberance to a more fragile, macro-driven market. Following 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 dropping 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 more risk-averse 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 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 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 predicts 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.