BIT Research says the current crypto market is in a corrective phase driven by two forces: changing policy expectations and shrinking liquidity. An easing in geopolitical tensions and the stronger-than-expected performance of the SpaceX IPO had previously helped Bitcoin rebound from technically oversold levels. That rebound lost part of its support after newly appointed Federal Reserve Chair Kevin Warsh unexpectedly delivered hawkish signals, removing the easing expectations that traders had been relying on.
According to the report, the market still lacks a macro catalyst strong enough to start a new upward leg. Daily trading volume has contracted sharply compared with the 2025 peak, stablecoin growth has continued to slow, and the support once provided by Strategy, formerly MicroStrategy, through Bitcoin purchases funded by STRC preferred stock issuance is also fading. Under the combined pressure of policy uncertainty, weaker summer seasonality and liquidity contraction, Bitcoin remains under short-term pressure.
Hawkish Fed messaging removes a key policy anchor
The market had broadly expected Kevin Warsh to issue dovish signals, but the FOMC instead made an unexpected hawkish turn. Several committee members indicated that if inflation pressure persists, there is still room for additional rate hikes this year. Warsh also made clear his determination to rebuild policy credibility. At the same time, he declined to disclose his personal rate dot-plot forecast, leaving the market without a clear policy anchor and pushing risk premiums higher.
BIT Research notes that, based on historical experience, this kind of uncertainty has not been favorable for sustained Bitcoin rebounds. The trend model cited in the report shows that as long as Bitcoin remains below $73,700, the broader trend stays bearish, while key resistance levels will gradually move lower over time. On the technical side, $62,446 remains an important support level. A break below that area would expose the market to faster downside momentum.
Liquidity contraction becomes the core constraint
Beyond macro policy, insufficient liquidity is becoming the central constraint for the current market. The report says daily trading volume has at times fallen to around $50 billion. During the July-to-October rally in 2025, average daily trading volume was about $200 billion, meaning current activity is only around 25% of that previous peak. This sharp decline reflects a market environment in which incremental capital has weakened significantly.
Stablecoin growth has also slowed. The 12-month rolling growth rates of USDT and USDC once reached 52% and 122%, respectively, at the end of 2025. Both have now fallen back to around 20% year on year, while six-month growth rates are closer to zero. For BIT Research, this signals that new liquidity entering the crypto market has diminished materially.
ETF and Strategy inflows are no longer providing the same support
At the same time, the inflows associated with Bitcoin ETFs and Strategy have weakened noticeably compared with earlier phases. Strategy’s aggressive issuance of STRC preferred stock previously helped push Bitcoin higher by roughly $15,000, or close to 20%. That support effect is now gradually fading. The report also notes that the market’s 30-day rolling fund flow remains in net outflow territory, making it difficult to form a sustained upward trend before a new and powerful catalyst appears.
Overall, the report emphasizes that inflation at 4.2% remains well above the Federal Reserve’s 2.0% target. With hawkish policy positioning, weaker summer seasonality and insufficient liquidity all weighing on the market, Bitcoin still lacks enough support to remain firmly above $60,000 in the short term. BIT Research says that as the market continues to clear out excesses, the current correction still has a chance to form a cycle low this summer. Prices may not begin a new rally quickly, but the process is preparing the ground for the next bull-market cycle. The above views are partly drawn from BIT on Target; the full BIT on Target report is available by contacting the team.