BIT Research says the crypto market is now in a corrective phase shaped by two main forces: changing policy expectations and shrinking liquidity. Easing geopolitical tensions and the stronger-than-expected performance of the SpaceX IPO had helped Bitcoin rebound from technically oversold levels. That rebound lost support after newly appointed Federal Reserve Chair Kevin Warsh delivered unexpectedly hawkish signals, reducing the market’s earlier expectation of easier policy conditions.
At the same time, stablecoin liquidity has continued to contract, while fresh capital entering the market remains limited. BIT Research describes the current environment as a return to the thin trading conditions often seen during the summer. From a pricing perspective, the market still lacks a macro catalyst strong enough to drive a new leg higher. Daily trading volume has fallen sharply from its 2025 peak, stablecoin growth has slowed, and the support once created by Strategy, formerly MicroStrategy, through Bitcoin purchases funded by STRC preferred share issuance is gradually fading.
Hawkish Fed Signals Remove a Policy Anchor
The market had broadly expected Kevin Warsh to deliver dovish signals, but the FOMC instead turned unexpectedly hawkish. Several committee members indicated that if inflation pressure persists, further rate increases this year remain on the table. Warsh also clearly expressed his intention to rebuild policy credibility. His refusal to disclose his personal rate dot-plot projection removed a clear policy anchor for the market and pushed risk premiums higher.
BIT Research notes that, based on historical experience, this kind of uncertainty has usually been unfavorable for a sustained Bitcoin rebound. With policy uncertainty, weak seasonality and liquidity contraction acting together, Bitcoin’s near-term performance remains under pressure.
Key Levels: $73,700 Resistance and $62,446 Support
The trend model cited by BIT Research shows that as long as Bitcoin remains below $73,700, the broader trend stays bearish. Key resistance levels are also expected to move lower over time within that model. On the technical side, $62,446 remains an important support level. A break below that area would add pressure for the downtrend to accelerate.
The report also compares the current setup with the bottoming process seen in 2022. Under that framework, the market could spend an extended period moving sideways and consolidating before gradually forming a cyclical low. The argument is not that a rapid new rally has already started, but that the market may be working through the clearing process required before the next cycle can take shape.
Stablecoin Growth Slows as Trading Volume Shrinks
Beyond macro policy, insufficient liquidity has become the central constraint facing the market. Daily trading volume has at times fallen to around $50 billion. During the July-to-October 2025 rally, average daily trading volume was around $200 billion, meaning current activity is only about 25% of that prior peak level.
Stablecoin growth has also slowed significantly. The 12-month rolling growth rates of USDT and USDC reached 52% and 122%, respectively, at the end of 2025. Both year-on-year growth rates have now fallen to around 20%, while their six-month growth rates are closer to zero. BIT Research says this reflects a clear weakening in new liquidity.
ETF and Strategy Inflows Lose Strength
Capital inflows linked to Bitcoin ETFs and Strategy are also weaker than before. Strategy had previously issued STRC preferred shares aggressively, using the financing to buy Bitcoin. That activity once helped push Bitcoin up by about $15,000, a gain close to 20%. BIT Research says this support effect is now fading.
The market’s 30-day rolling capital flow remains in net outflow territory. Without a new and powerful catalyst, a sustained upward trend remains difficult to form. Overall, inflation at 4.2% remains far above the Federal Reserve’s 2.0% target. Under the combined influence of a hawkish policy stance, weaker summer seasonality and insufficient liquidity, Bitcoin still lacks enough support to remain firmly above $60,000 in the short term.
BIT Research concludes that as the market gradually completes its clearing process, the current correction still has room to form a cyclical low this summer. Price does not have to begin a new rally quickly, but the process described in the report is preparing the ground for the next bull-market cycle. Some of the views above come from BIT on Target, and the full BIT on Target report is available by contacting BIT on Target.