Bitcoin has surged approximately $15,000 since the U.S. House passed the 'Big Beautiful Bill' on July 3, 2025, pushing the cryptocurrency into what financial newsletter The Kobeissi Letter describes as 'crisis mode.' In a detailed X thread published July 14, the analysis firm highlighted an alarming divergence from traditional macroeconomic indicators, including a falling U.S. Dollar Index and soaring fiscal deficits.
Deficit-Driven Rally Defies Fundamentals
Kobeissi Letter noted that Bitcoin's rally came despite a record $316 billion U.S. deficit in May 2025 alone. The divergence became evident after April 9, following a tariff pause, and accelerated sharply after the spending bill's passage. While the U.S. Dollar Index (DXY) dropped 11% over six months, Bitcoin hit multiple new all-time highs within a single week. This pattern, the letter argued, is anything but normal.
The analysts pointed out that gold and bond yields also rose simultaneously, an unusual combination that traditionally signals heightened uncertainty. The iShares Bitcoin Trust (IBIT) reached $76 billion in assets under management in under 350 days — a milestone that took the largest gold ETF more than 15 years. Institutional capital, from family offices to hedge funds, is increasingly rotating into Bitcoin as a hedge against ongoing deficit monetization.
Institutional Positioning and Price Target
Kobeissi Letter revealed that it had been buying Bitcoin on dips at $80,000, $90,000, and $100,000, raising its price target from $115,000 to $120,000 or higher. The firm emphasized that even conservative institutional investors are now considering allocations of around 1% to Bitcoin, suggesting a paradigm shift in portfolio construction.
'When we say Bitcoin has entered 'crisis mode,' this is not necessarily a bearish call for other assets. In fact, risky assets will continue to run higher as the short-term effects of more deficit spending are 'bullish.' The long-term effects certainly are not.' — The Kobeissi Letter
Ethereum Leverage Shorts Signal Major Squeeze
Beyond Bitcoin, Kobeissi Letter highlighted record-high leveraged short positions on Ethereum, reminiscent of conditions preceding previous market bottoms. If Bitcoin's momentum continues, forced covering of these shorts could trigger a cascade, further amplifying gains across the crypto market. The analysis warns that while short-term flows are bullish due to fiscal stimulus, the long-term debt sustainability remains a critical risk for all risk assets.