Russell Thompson, Chief Investment Officer at Hilbert Group, has warned that global markets are experiencing a rapid liquidity squeeze and that the usual catalysts may no longer be enough to revive risky assets like Bitcoin. The London-based Hilbert Group manages digital asset funds for both institutional and individual investors. According to Thompson, even a swift resolution of geopolitical crises in Iran is unlikely to kickstart a new rally in risk assets due to the increasing influence of central bank policies.
Sharp liquidity contraction hits Bitcoin
Thompson has noted that, while some stability has returned to certain parts of the financial sector through recently introduced reserve term lending programs, a liquidity tightening of about 20–25% is now on the horizon. This anticipated reduction could continue to pressure Bitcoin. Over the past six months, Bitcoin’s price has seen significant turbulence; what was a buoyant environment at the end of last year has shifted into a much more fragile macro setting in recent months.
In October 2025, Bitcoin soared to an all-time high above $126,000 but entered a downward spiral before the end of the year. As 2026 began, prices had plunged to around $63,000, reflecting a sharp 50% drop from the peak. This period saw accelerated selloffs across the broader crypto market, outflows from ETFs, and investors moving away from risk.
In his report, Thompson stated, “Even if developments in Iran are resolved quickly, absent strong external support, I do not expect a sustained upward move in risky assets.”
Possible US policy moves and market expectations
Thompson believes US policymakers will not hesitate to take action when needed. Potential steps could include adjusting the supplementary leverage ratio, aggressive use of the Treasury’s general cash account, and a series of rate cuts under a new Fed chair. Spending from the Treasury General Account injects net liquidity into the market, while increases in the account tend to have the opposite effect.
Markets seek a new balance
After months of volatility, Bitcoin is currently trading around $75,600. While this is still well below its all-time high, the extreme downward swings have been replaced by a relatively calmer period, according to CryptoAppsy data. In this environment, investors are shifting strategies, focusing on macro data and policy signals, and hoping that progress on crypto regulations provides additional support.
Thompson anticipates that significant new legal frameworks in the US should become clearer by early summer, and that a further decline in inflation could prompt fast expansion of the Fed’s balance sheet. Rising oil prices are putting the brakes on economic growth, and signs of weakness in the labor market are increasing, adding a deflationary undertone to the overall market.
Thompson also points out that, while the market remains heavily focused on possible actions by the Fed, the US Treasury’s ability to inject funds into financial markets and the real economy is substantial. Given the Treasury’s experienced management, more proactive measures should not come as a surprise in the near future.
In the short run, Bitcoin is expected to remain volatile, but Thompson signals that improvements could emerge over the medium term. He projects that the current liquidity cycle could bottom out by 2027 and suggests the market could see a renewed uptrend by year-end, possibly reaching new all-time highs as recovery gains momentum.
Despite a harsh correction and ongoing global uncertainty, market watchers are keeping a close eye on fiscal and monetary moves from key institutions. Industry hopes are pinned on not just policy pivots but also clearer regulatory guidance to foster renewed confidence in digital assets.
Experts observe that the interplay between geopolitical events, inflationary trends, and liquidity supply continues to dictate crypto valuation trends globally. While quick fixes may be elusive, the groundwork for a healthier, more resilient market could be laid with concerted policy action and regulatory progress.
Looking forward, the fate of Bitcoin and the wider crypto landscape appears closely tied to decisions coming from Washington, as both liquidity and sentiment hinge on central bank actions and legislative clarity.
Overall, while short-term uncertainty persists, the stage may be set for a new growth cycle for Bitcoin once macro risks subside and supportive policy measures take effect.
