Global liquidity is set to deteriorate sharply, according to Russell Thompson, chief investment officer at crypto asset manager Hilbert Group (HILB), who said that even a quick geopolitical resolution in Iran is unlikely to sustain a rally in risk assets without political support.
Liquidity conditions have stabilized in parts of the financial sector following the rollout of the Reserve Maturity Program (RMP), Thompson said, but a broader tightening of 20%-25% is looming, a significant move that could leave bitcoin behind struggling in the short term.
“Even with a quick resolution in Iran, I don’t think risk assets will accumulate for any sustainable amount of time without outside help,” Thompson said in the report published last week.
Thompson said he expects U.S. policymakers to respond. He pointed to likely measures including reform of the supplementary leverage ratio (SLR), a significant drawdown of the Treasury General Account (TGA) without offsetting Federal Reserve bill issuance, and a series of rate cuts under a potential new Fed chair.
The SLR is a banking regulation that determines how much capital large banks must hold in relation to their total leverage. TGA is the US Treasury’s principal cash account with the Federal Reserve.
When the Treasury draws down the TGA (spends money on it), liquidity is effectively injected into the financial system; as it builds up the TGA, liquidity is drained.
Bitcoin’s performance over the past six months has been marked by sharp volatility, a clear shift from the late-2025 glut to a more fragile, macro-driven market.
After hitting an all-time high above $126,000 in October 2025, bitcoin entered a sustained move through the end of the year and into early 2026. By February, prices had fallen to around $63,000, down about 50% from the peak, amid a broader crypto market selloff and financial conditions. This period was marked by weaker demand, exchange-traded fund (ETF) outflows and a riskier macro backdrop, with BTC underperforming equities in some stretches.
Bitcoin is currently trading around $75,600, leaving it well off its peak, but no longer in freefall. In short, the last six months have seen a full cycle: from peak euphoria to a deep correction to a tentative stabilization phase, where macro liquidity, political expectations and investor positioning are now the dominant drivers.
Advances in crypto regulation could also provide support. Thompson said he expects legal clarity on key measures before the summer break and a faster-than-expected expansion of the Fed’s balance sheet as disinflationary pressures grow.
Higher oil prices, he argued, could ultimately weigh on growth, while a subdued labor market and new stress in private credit could contribute to the disinflationary backdrop.
Markets remain overly focused on the Federal Reserve as the primary source of liquidity, Thompson said, but the U.S. Treasury has significant capacity to inject funds into both the real economy and financial markets. With treasury leadership experienced in implementing such tools, he expects a more proactive approach.
The result: short-term pressure on bitcoin, but improved conditions in the medium term.
Thompson said he expects bitcoin to be “significantly higher” by the end of the year as liquidity dynamics develop. Even in a longer-term scenario, he sees liquidity bottoming out around 2027, a timeline that could coincide with new records.
Read more: US crypto adoption on the way back, bitcoin still dominates, Deutsche Bank says
