Bitcoin May Face Short-Term Pressure Due to Tightening Liquidity, According to Hilbert Group CIO

According to Russell Thompson, chief investment officer at Hilbert Group, global liquidity is on the verge of a significant decline, which could hinder the performance of risk assets and bitcoin, even if the current geopolitical tensions in Iran are resolved quickly. Despite the stabilization of liquidity conditions in certain parts of the financial sector following the introduction of the reserve maturity program, Thompson anticipates a broader tightening of 20-25%, which could pose a substantial challenge for bitcoin in the short term. Thompson believes that without external support, risk assets are unlikely to experience a sustained rally, but he expects U.S. policymakers to intervene with measures such as reforming the supplementary leverage ratio, reducing the Treasury General Account, and implementing 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 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 has the opposite effect. 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 experienced a sustained decline through the end of the year and into early 2026, with prices falling to around $63,000 by February, a drop of approximately 50% from its peak. This period was characterized by weaker demand, exchange-traded fund outflows, and a more risk-averse macro environment, 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 complete 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, but 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.