BIT research says the crypto market is now in an adjustment phase shaped by two forces: shifting policy expectations and changing liquidity conditions. An easing in geopolitical tensions and the stronger-than-expected performance of the SpaceX IPO had briefly helped Bitcoin rebound from technically oversold levels. That support faded after new Federal Reserve Chair Kevin Warsh unexpectedly delivered a hawkish signal, weakening the market’s earlier expectation of a looser policy backdrop.
According to the report, the current market lacks a macro catalyst strong enough to drive a new leg higher. Daily trading volume has contracted sharply from its 2025 peak, stablecoin growth continues to slow, and the support created by Strategy, formerly MicroStrategy, through STRC preferred-share financing to buy Bitcoin is gradually weakening. With policy uncertainty, weaker summer seasonality and shrinking liquidity acting together, Bitcoin’s short-term trend remains under pressure.
Hawkish Fed messaging removes a policy anchor
The market had widely expected Kevin Warsh to send a dovish message, but the FOMC instead shifted in a hawkish direction. Several committee members indicated that if inflation pressure continues, there is still room for another rate increase this year. Warsh also stated clearly that he intends to rebuild policy credibility. At the same time, he declined to disclose his personal interest-rate dot-plot projection, leaving the market without a clear policy anchor and pushing risk premia higher.
BIT’s trend model shows that as long as Bitcoin remains below $73,700, the broader trend stays bearish, with key resistance levels moving lower over time. On the technical side, $62,446 remains an important support level. A break below that level would leave room for the downward trend to accelerate. The report also compares the current phase with the bottom-building process seen in 2022, when the market went through a prolonged period of range-bound consolidation before a cycle low was gradually formed.
Liquidity is becoming the central constraint
Beyond macro policy, insufficient liquidity is now one of the main constraints facing the market. Daily trading volume has at times fallen to about $50 billion. During the rally from July to October 2025, average daily volume was about $200 billion, meaning current activity is only around 25% of that earlier peak. With thinner volume, rebounds have less capital support, and price action becomes more sensitive to policy statements and changes in flows.
Stablecoin growth has also slowed materially. The 12-month rolling growth rates of USDT and USDC reached 52% and 122%, respectively, in late 2025. Both year-on-year growth rates have now fallen back to about 20%, while the six-month growth rate is closer to zero. BIT says this reflects a clear weakening in new liquidity entering the market.
ETF and Strategy inflows no longer provide the same support
Inflows tied to Bitcoin ETFs and Strategy are also weaker than before. Strategy’s aggressive issuance of STRC preferred shares previously helped push Bitcoin up by about $15,000, a gain close to 20%. That support effect is now fading. The market’s 30-day rolling fund flow remains in net outflow territory, and without a new strong catalyst, BIT argues that a sustained upward trend remains difficult to establish.
The report also notes that inflation at 4.2% remains far above the Federal Reserve’s 2.0% target. Under the combined influence of a hawkish stance, weaker summer seasonality and inadequate liquidity, Bitcoin still lacks sufficient support to remain firmly above $60,000 in the short term. Even so, as the market gradually completes its clearing process, this adjustment is described as part of a cycle-low formation during the summer. Prices may not begin a new rally quickly, but the report says this process is preparing the ground for the next bull-market cycle. Some of the above views come from BIT on Target.