Bitcoin has surged approximately $15,000 in just days, diverging sharply from a weakening U.S. dollar and swelling fiscal deficits — a combination that the Kobeissi Letter describes as market entering 'crisis mode.' In a detailed X thread published on July 14, 2025, the financial newsletter focused on fundamental and technical analysis of global capital markets argued that the rally is being driven by relentless deficit spending.
Deficit Spending Fuels Abnormal Rally
According to the Kobeissi Letter, the catalyst came on July 3, when the U.S. House passed the so-called 'Big Beautiful Bill,' a massive spending package. Bitcoin immediately began its ascent, adding roughly $15,000 in value. This occurred despite data showing a U.S. deficit of $316 billion for May 2023 alone — the third highest on record at the time. The analyst note points to a clear divergence starting April 9, after a tariff pause, which intensified following the bill's passage. Bitcoin made new highs multiple times daily that week, while the U.S. Dollar Index (DXY) fell 11% over six months.
The newsletter emphasizes that Bitcoin's rise has coincided with gains in gold and rising bond yields — a combination it calls 'abnormal.' Institutional interest is accelerating at an unprecedented pace. 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 ETF over 15 years. This reflects a structural shift in institutional allocation preferences.
Institutional Inflows and Leverage Risks
The Kobeissi Letter notes that family offices and hedge funds are increasingly allocating capital to Bitcoin, with even conservative funds considering ~1% allocations. Analysts attribute the surge to the market pricing in ongoing U.S. deficit spending, suggesting significant capital rotation. 'Furthermore, when we say Bitcoin has entered 'crisis mode' this isn't necessarily a bearish call for other assets,' the newsletter stated on X. '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 firm revealed that it has capitalized on the trend by buying BTC dips at $80,000, $90,000, and $100,000, and raised its target to $120,000+ after initially calling for $115,000. Separately, the Kobeissi Letter observed record-high leverage shorts on ether, reminiscent of conditions before a prior market bottom, raising the possibility of a major crypto short squeeze. Bitcoin's explosive move signals a loss of faith in traditional economic frameworks. As deficit monetization and dollar creditworthiness erode, cryptocurrencies are transitioning from fringe assets to a core part of institutional portfolios — but long-term tail risks remain substantial.