Bitcoin has soared approximately $15,000 since July 3, 2025, when the U.S. House passed a major spending bill dubbed the 'Big Beautiful Bill,' while the U.S. Dollar Index (DXY) declined 11% over six months. The Kobeissi Letter, a financial analysis firm, issued a warning on X (formerly Twitter) on July 14, stating that the divergence from traditional economic indicators signals a market entering 'crisis mode.'
Deficit Spending Drives Abnormal Bitcoin Rally
According to the Kobeissi Letter, Bitcoin's rapid ascent is occurring alongside worsening U.S. fiscal deficits. In May 2023 alone, the U.S. deficit reached $316 billion—the third-largest on record at that time. The analysis highlights a clear divergence starting April 9, following a tariff pause, which intensified after the spending bill's passage. Bitcoin made new highs multiple times daily this week, while the DXY fell 11% over six months.
Notably, Bitcoin's rally has coincided with gold gains and rising bond yields. Kobeissi describes this combination as 'abnormal' and emphasizes massive institutional inflows. The iShares Bitcoin Trust (IBIT) reached a record $76 billion in assets under management in under 350 days—a milestone that took the largest gold exchange-traded fund over 15 years.
Institutional Investors Accelerate Allocation
The analysis notes that family offices and hedge funds are increasingly allocating capital to Bitcoin (BTC), with even conservative funds considering allocations of approximately 1%. Kobeissi's team attributes the surge to the market pricing in ongoing U.S. deficit spending, with significant capital rotation underway.
Kobeissi added on X: 'Furthermore, when we say Bitcoin has entered 'crisis mode' this isn't 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 stated it has capitalized on this trend, buying Bitcoin dips at $80,000, $90,000, and $100,000, raising its target to $120,000+ after initially calling for $115,000. Additionally, the firm observed record-high leverage shorts on Ethereum, reminiscent of conditions before a prior market bottom, raising the possibility of a major crypto short squeeze.