The current market is in an adjustment stage jointly led by policy expectations and changes in liquidity. Geopolitical de-escalation and the better-than-expected performance of the SpaceX IPO once pushed Bitcoin to rebound from technically oversold levels. However, the new Federal Reserve Chair, Kevin Warsh, unexpectedly delivered hawkish signals, depriving the market of the anticipated accommodative policy support. Meanwhile, stablecoin liquidity continues to contract, with a noticeable lack of new capital inflows, pushing the market back into a typically subdued trading phase characteristic of summer.
From a pricing perspective, the market still lacks sufficient macro catalysts to drive a new round of upward momentum. Daily trading volume has significantly shrunk compared to the peak in 2025, stablecoin growth rates continue to slow, and the supportive effect from Strategy (formerly MicroStrategy) buying Bitcoin through STRC preferred share financing is gradually waning. Under the combined influence of policy uncertainty, seasonal weakness, and liquidity contraction, Bitcoin's short-term trend remains under pressure.
Hawkish Expectations Rise: Policy Uncertainty Suppresses Market Risk Appetite
The market previously widely expected the new Fed Chair, Kevin Warsh, to signal a dovish stance, but the FOMC unexpectedly turned hawkish. Several members hinted at the possibility of further rate hikes this year if inflation pressures persist, and Warsh explicitly expressed his determination to rebuild policy credibility.
Trend models indicate that as long as Bitcoin remains below $73,700, the overall trend remains bearish, with key resistance levels gradually declining over time. Concurrently, Warsh's refusal to disclose his personal rate dot plot predictions has left the market without a clear policy anchor, leading to a rise in risk premiums. Historical experience shows that such uncertainty is generally unfavorable for sustained Bitcoin rebounds.
Technically, $62,446 remains a crucial support level. A break below this level could accelerate the downtrend. However, similar to the bottoming process in 2022, the market might also experience a prolonged period of consolidation, gradually forming a cycle low.
Liquidity Continues to Contract: Lack of New Capital Limits Rebound Potential
Beyond macro factors, insufficient liquidity is becoming a core constraint for the current market. Daily trading volume has sometimes shrunk to around $50 billion, while the average daily volume during the uptrend from July to October 2025 was approximately $200 billion, representing only about 25% of the previous peak.
Stablecoin growth has also noticeably slowed. The 12-month rolling growth rates for USDT and USDC peaked at 52% and 122% respectively in late 2025. Currently, their year-on-year growth rates have fallen back to around 20%, with the 6-month growth rate approaching zero, reflecting a significant weakening of new liquidity.
Meanwhile, capital inflows from Bitcoin ETFs and Strategy have also weakened considerably compared to before. Previously, Strategy's aggressive issuance of STRC preferred shares once drove Bitcoin up by approximately $15,000, a gain close to 20%, but this supportive effect is fading. Currently, the market's 30-day rolling capital flow remains in a net outflow state. In the absence of new, strong catalysts, a sustained uptrend remains difficult to form.
Overall, with inflation at 4.2% far exceeding the Fed's 2.0% target, and under the combined influence of the hawkish stance, typical summer seasonal weakness, and liquidity scarcity, Bitcoin currently lacks sufficient support to sustain a stable position above $60,000 in the short term. However, as the market gradually completes its clearing process, this round of adjustment could still establish a cycle low this summer. Prices may not immediately launch a new bull run, but this process may be laying the groundwork for the next bull market cycle.
Some of the above viewpoints are from BIT on Target. Contact us to obtain the full BIT on Target report.
Disclaimer: The market carries risks, and investment requires caution. This article does not constitute investment advice. Digital asset trading can be highly risky and volatile. Investment decisions should be made after carefully considering personal circumstances and consulting with financial professionals. BIT is not responsible for any investment decisions based on the information provided herein.
