Market Insights: Bitcoin and Global Liquidity
Russell Thompson, the chief investment officer at Hilbert Group, has expressed concerns about a potential rapid decline in global liquidity. He believes that even if the geopolitical situation regarding Iran resolves quickly, risk assets are unlikely to see sustained growth without supportive policies in place.
According to Thompson, while some areas of the financial sector have stabilized thanks to the Reserve Maturity Program, a broader tightening of about 20-25% could severely impact Bitcoin withdrawals. “In the short term, we are struggling,” he remarked. It seems the struggles are pretty evident right now.
Thompson elaborated, stating in a recent report that without external support, a prolonged increase in risk assets is improbable. He anticipates a response from U.S. policymakers, potentially through measures like revising the supplementary leverage ratio and reconsidering Treasury account operations without offsetting short-term bill issuance from the Federal Reserve.
The supplemental leverage ratio relates to how much capital large banks are required to maintain against their total leverage, while the Treasury General Account serves as the government’s primary cash account. When funds are withdrawn from this account, it can add liquidity to the financial system, although increasing its balance can reduce liquidity.
Bitcoin’s trajectory over the past six months has been quite turbulent. It experienced a significant shift from a booming second half of 2025 to a more fragile market environment. After reaching a remarkable high of over $126,000 in October 2025, Bitcoin has been on a downward trend, dropping to around $63,000 by February 2026—about a 50% decline, which mirrors a general downturn in the cryptocurrency sphere and tightening financial conditions.
Currently, Bitcoin trades at approximately $75,600, not in freefall like before but still far from its peak. The recent months have shown a complete journey from overwhelming excitement to serious correction and a phase of tentative stabilization, heavily influenced by macro liquidity and policy expectations.
Thompson noted that potential advancements in cryptocurrency regulation might enhance the situation. He theorizes that the Federal Reserve’s balance sheet could grow more rapidly as key policies become clearer, particularly before the summer recess while inflation pressures mount. He also highlighted how rising oil prices might negatively influence growth, and a softening labor market could further impact the disinflationary forces at play.
While there’s a considerable focus on the Federal Reserve as a primary source of liquidity, Thompson argues that the U.S. Treasury also holds a substantial capacity to inject funds. He expects a more proactive stance from Treasury leadership given their past experience with these tools. As things stand, Bitcoin might face short-term challenges, but the medium-term outlook appears brighter.
Thompson is optimistic about Bitcoin, predicting a “significant” rally by the end of the year as liquidity dynamics shift. Even looking ahead, he sees liquidity reaching a bottom around 2027, which could coincide with a new all-time high for Bitcoin. It’s a lot to consider in this ever-evolving market.
