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The Kobeissi Letter

Feb 25 • 11 tweets • 4 min read • Read on X

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Did liquidity in crypto just dry up?

Crypto markets have now erased -$325 BILLION of market cap since Friday morning.

At 5:00 PM ET today, crypto lost -$100 billion in 1 HOUR without any major headlines.

What is happening with crypto? Let us explain.

(a thread)

Over the last 24 hours alone, we have seen ~$150 billion liquidated from the crypto market.

Selling has broadened with just about all crypto assets falling sharply.

Even the memecoin market appears to have lost a significant portion of its liquidity.

So, what's happening?

It appears to have all began with Solana which is now down -22% since Friday.

Amid the memecoin frenzy, Solana saw extreme relative strength.

However, as memecoins began to fade, Solana also began to fade.

For a while, selling in Solana was largely isolated from Bitcoin.

However, as the S&P 500 began selling off on Friday, Bitcoin joined the downward move.

As seen below, the drop in the S&P 500 came with an acceleration of selling in Bitcoin.

Now, Bitcoin is losing its relative strength after breaking below $98,000 support today.

It's rather strange that this comes hours after Citadel made a major pivot on their crypto stance.

Today, Bloomberg announced that $65 billion Citadel Securities is looking to become a liquidity provider for Bitcoin and crypto.

Markets took this as a "sell the news" event.

It also seems that the Bybit hack on February 21st has dampened sentiment in the market.

Arkham Intelligence has declared this hack the "largest financial heist in history."

The closest competitor is the theft from the Central Bank of Iraq, which lost $1B in March 2003.

In fact, the Bybit hack more than DOUBLED the 2nd largest hack in crypto history.

PolyNetwork's $611M hack in August 2021 was previous largest crypto hack.

Weakness seen in Ethereum has also put more pressure on broader crypto markets.

Hacks deteriorate confidence.

The technical picture also appears to have lost momentum.

However, this also does not mean that crypto markets are set for a prolonged bear market.

We have seen countless -10% pullbacks in Bitcoin over the course of this bull run.

Technical pullbacks are healthy.

And, to top it all off, Sam Bankman-Fried is back on X.

Amid the crypto crash, SBF returned to state he has "a lot of sympathy for government employees."

This comes as DOGE and Elon Musk prepare for more mass layoffs in the federal government.

Lastly, as volatility returns to equity markets, risky assets like Bitcoin are pulling back.

We saw historic levels of risk appetite in 2024 and heading into 2025.

A pullback in risk appetite means less liquidity for crypto markets.

This has certainly happened before.

Overall, there really isn't one specific factor pushing crypto lower right now.

Rather, its a combination of factors which have resulted in reduced liquidity.

Crypto markets need LIQUIDITY to thrive.

Follow us @KobeissiLetter for real time analysis as this develops.

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More from @KobeissiLetter

The Kobeissi Letter

@KobeissiLetter

Nov 20

What just happened?

In its fastest reversal since "Liberation Day," the S&P 500 just lost -$2 TRILLION of market cap in 5 hours.

Nvidia went from +6% to -3% after reporting RECORD revenue of $55 billion without ANY new headlines.

Why did this happen?

Let us explain.

Here was the S&P 500's heat map at the open today.

After Nvidia, $NVDA, crushed earnings reporting record quarterly revenue of $55 billion, stocks were deep green.

The Nasdaq 100 was on track for its largest daily gain since May 2025.

Then, at 10:30 AM ET, everything changed.

As shown below, the S&P 500 went from +130 points to down -50 points in a matter of minutes.

One would expect that a market moving headline came out.

But, nothing new happened aside from an 11:20 AM headline that the BLS is releasing the November jobs report on December 16.

Read 12 tweets

The Kobeissi Letter

@KobeissiLetter

Nov 16

What is happening in crypto?

Over the last 41 days, crypto has erased -$1.1 trillion in market cap, or -$27 billion PER DAY.

Crypto market cap is now ~10% BELOW levels seen during the record -$19 billion liquidation on October 10th.

This is a structural move. Let us explain.

This decline has been strange for one key reason:

There haven't been many material bearish developments on the fundamental side of crypto.

Just days ago, President Trump said America being "number one in crypto" is his top priority.

Yet, Bitcoin is down -25% in one month.

It also appears to be a structural and mechanical downturn.

It all began with institutional outflows in mid-to-late October.

In the first week of November, crypto funds saw -$1.2 billion of outflows.

The problem becomes excessive levels of leverage AMID these outflows.

Read 12 tweets

The Kobeissi Letter

@KobeissiLetter

Nov 9

Stimulus checks are back:

President Trump just announced the "tariff dividend," a payment of AT LEAST $2,000 per American.

We expect 85%+ of US adults to receive this, resulting in $400+ BILLION handed out.

All as US debt nears $40 trillion.

What's next? Let us explain.

This morning, President Trump made the below announcement:

A dividend of at least $2,000 per person will be paid, EXCLUDING "high income people."

The economic implications of such a massive "stimulus"-like payment are huge.

Especially with markets at record highs.

First, who will be receiving this payment?

Let's take a look at the most recent stimulus payment, the March 2021 $1,400 stimulus check.

Full payments were only made to:

Single filers making up to $75,000, households making up to $112,500, and married earners up to $150,000.

Read 12 tweets

The Kobeissi Letter

@KobeissiLetter

Nov 7

The US government shutdown is expanding:

Today, the FAA officially began cutting 700 flights PER DAY across 40 airports.

Airports are now facing a shortage of 3,500 air traffic controllers with 4+ MILLION passengers impacted.

What happens next?

Let us explain.

Today, the US government shutdown officially enters day 38.

This marks the longest shutdown in US history and nearly 5 TIMES the average.

But, today also marks the first day that the shutdown has gone "mainstream."

The FAA has announced flight cancellations beginning today.

Below is a map of the 40 airports impacted.

More than 700 US flights were canceled as of 9 AM ET today.

The FAA announced that 10% of flights may be canceled until the end of the shutdown.

So far, 4 MILLION travelers have been impacted by cancellations and delays.

Read 11 tweets

The Kobeissi Letter

@KobeissiLetter

Nov 4

It's official:

The US government has now entered day number 35, making it the LONGEST in history.

Since the shutdown began on October 1st, the US government has borrowed $600 BILLION worth of debt.

That's +$17 billion PER DAY.

What's happening? Let us explain.

Today marks day 35 of the 2025 US government shutdown.

This ties the longest shutdown in history seen during President Trump's 1st term, in December 2018.

Historically speaking, the average length of a shutdown is 8 days.

The current shutdown is now 4.5 TIMES longer.

And, the end appears to be distant at best.

Currently, markets see the US government shutdown lasting until December 1st, per Polymarket.

This would mark a 61 day government shutdown, or 26 days LONGER than the current record.

The economic implications are spreading.

Read 12 tweets

The Kobeissi Letter

@KobeissiLetter

Nov 2

The elephant in the room:

AI stocks are outperforming consumer stocks by 20%+ over the last 60 DAYS.

And, as AI investment exceeds $1 TRILLION per year, car repossessions are at 2009 levels.

There are 2 US economies: Rich vs Poor, and AI is the lifeline of it all.

(a thread)

For the first time in history, the Magnificent 7 stocks are now worth over a combined $20 TRILLION.

This means that these 7 stocks alone now account for a record ~35% of the S&P 500.

Not even the Dot-Com bubble in 2000 saw concentration like this.

Tech has taken over.

And, this has been fantastic for investors.

Since the April 2025 bottom, the S&P 500 has added over +$18 trillion in market cap.

Last week, Nvidia became the first company to become worth over $5 trillion.

Over HALF of the S&P 500's gains since 2023 are from 7 stocks.

Read 12 tweets

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