BIT Research says the crypto market is now in an adjustment phase shaped by two forces: changing policy expectations and weakening liquidity. A temporary easing in geopolitical tensions, together with a stronger-than-expected SpaceX IPO performance, had helped Bitcoin rebound from technically oversold levels. That rebound lost support after incoming Federal Reserve Chair Kevin Warsh unexpectedly delivered hawkish signals, reducing the easing expectations that traders had previously relied on.
Hawkish signals replace expected policy support
The report notes that the current pricing environment still lacks a macro catalyst strong enough to drive a new upward cycle. Daily trading volume has contracted significantly from its 2025 peak, stablecoin growth continues to slow, and the support created by Strategy, formerly MicroStrategy, through STRC preferred stock financing to buy Bitcoin is gradually fading. Together, policy uncertainty, seasonal weakness, and liquidity contraction are keeping Bitcoin under short-term pressure.
Before the latest policy shift, the market widely expected Kevin Warsh to send a dovish message. Instead, the FOMC turned unexpectedly hawkish. Several committee members indicated that if inflation pressure persists, additional rate hikes could still occur this year. Warsh also made clear his intention to rebuild policy credibility. According to the trend model cited by BIT Research, as long as Bitcoin remains below $73,700, the broader trend stays bearish, while key resistance levels will continue to move lower over time.
Warsh also refused to disclose his personal rate-dot projection, leaving the market without a clear policy anchor and pushing risk premiums higher. The report says that, based on historical experience, this type of uncertainty has generally been unfavorable for a sustained Bitcoin rebound.
Bitcoin’s $62,446 support level remains central
From a technical perspective, $62,446 remains an important support level. If Bitcoin breaks below that area, the downtrend could accelerate further. BIT Research compares the current setup with the bottoming process seen in 2022, when the market went through a prolonged period of range-bound consolidation before gradually forming a cycle low. Under that framework, the current correction does not point to an immediate new rally, but rather to a longer process of clearing and rebuilding market structure.
Liquidity shortage is described as the core constraint facing the market. Daily trading volume has at times fallen to around $50 billion. During the July-to-October 2025 rally, average daily volume was about $200 billion, meaning current activity is only around 25% of that earlier peak. Stablecoin growth has also slowed sharply. The 12-month rolling growth rates of USDT and USDC reached 52% and 122%, respectively, near the end of 2025; both year-on-year growth rates have now fallen back to around 20%, while six-month growth is closer to zero. This reflects a clear decline in new liquidity entering the market.
ETF and Strategy inflows no longer provide the same support
Capital inflows from Bitcoin ETFs and Strategy have also weakened compared with earlier stages of the cycle. Strategy’s aggressive issuance of STRC preferred shares previously helped push Bitcoin up by about $15,000, a gain close to 20%. That support is now fading. The market’s 30-day rolling capital flow remains in net outflow territory, and without a new powerful catalyst, BIT Research says a durable upward trend remains difficult to form.
Overall, inflation at 4.2% remains far above the Federal Reserve’s 2.0% target. Against the combined backdrop of a hawkish policy stance, weaker summer seasonality, and insufficient liquidity, Bitcoin still lacks enough support to consistently hold above $60,000 in the short term. At the same time, as the market continues to clear, BIT on Target’s view is that this correction still has room to form a cycle low during the summer. Prices may not quickly enter a new rally, but the process is being framed as preparation for the next bull-market cycle.