Bitcoin May Face 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 hinder the performance of risk assets, including bitcoin, 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 certain areas of the financial sector, a broader tightening 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 his doubts about the ability of risk assets to sustain a rally without external support, even in the event of a swift resolution to the Iran conflict. He expects US policymakers to intervene with measures such as reforming the supplementary leverage ratio, reducing the Treasury General Account, and implementing a series of rate cuts under a potential 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 effectively injects liquidity into the financial system, whereas building up the TGA drains liquidity. Over the past six months, bitcoin has experienced 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 sustained 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 its peak. This period was characterized by weaker demand, exchange-traded fund outflows, and a more risk-averse macro backdrop, with bitcoin underperforming equities at times. 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 Federal Reserve'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 experienced Treasury leadership, 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.