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The Kobeissi Letter Profile picture
@KobeissiLetter
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) Image
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? Image
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. Image
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. Image
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. Image
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. Image
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. Image
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. Image
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. Image
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. Image
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. Image

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More from @KobeissiLetter

The Kobeissi Letter Profile picture
Aug 23
Fed Chair Powell has caved:

In 1 month, the Fed will CUT rates and blame a "weaker labor market."

Meanwhile, we now have PPI inflation growth at a 3-year high and CPI inflation above 2% for 53-STRAIGHT months.

Don't own assets? You will be left behind. Here's why.

(a thread) Image
To better understand what's happening, you must first understand the Fed's mandate:

The Fed's purpose is to reduce unemployment and avoid inflation/deflation.

This is the Fed's "dual mandate."

Since 2021, the Fed has been laser-focused on the inflation side of this mandate. Image
However, Fed Chair Powell just made a MASSIVE pivot:

Powell said the "shifting balance of risks may warrant adjusting our policy stance."

In other words, the Fed now views unemployment as a BIGGER risk than inflation.

This is a near-confirmation that rate cuts are coming. Image
Read 16 tweets
The Kobeissi Letter Profile picture
Aug 21
This is absolutely insane:

There are now $40 BILLION worth of US data centers under construction, up +400% since 2022.

For the first time in history, the value of US data centers under construction will soon EXCEED office buildings.

This is a historic shift.

(a thread) Image
Meanwhile, office construction is collapsing as AI and digitalization continues to grow.

The total value of office buildings under construction has declined by nearly -50% since 2020.

The commercial real estate crisis continues to worsen amid the AI revolution. Image
US office prices have fallen over -40% from there pre-pandemic peak.

Office vacancy rates reached 20.4% in Q1 2025, an all-time high.

To put this into perspective, the post-2008 Financial Crisis peak was ~17.5%

Where are developers turning to now? Data centers. Image
Read 12 tweets
The Kobeissi Letter Profile picture
Aug 20
It's official:

The US has now seen 446 LARGE bankruptcy filings in 2025, officially +12% ABOVE pandemic levels in 2020.

In July alone, the US saw 71 bankruptcies, marking the highest single-month total since July 2020.

What's happening? Let us explain.

(a thread) Image
The trend began accelerating in April 2025:

371 US large companies went bankrupt in the first 6 months of 2025.

In June alone, 63 companies filed for bankruptcy, officially pushing above 2020 levels.

The strangest part?

It's barely getting any media attention. Image
In July, it got even worse:

Large public and private company bankruptcy filings increased to 71 last month.

This marked the HIGHEST sing-month total since July 2020.

Year-to-date, there have been 446 large bankruptcies in the US, putting us on track to near 2010-levels. Image
Read 15 tweets
The Kobeissi Letter Profile picture
Aug 19
Something is seriously wrong here:

For the first time in history, a NEW home in the US costs $33,500 LESS than an EXISTING home, per Reventure.

Not even June 2005 saw such a large gap, right before the 2008 Financial Crisis.

What is happening? Let us explain.

(a thread) Image
It all stems back to March 2020, when the Fed implemented their largest rate cut in history.

This led to the average rate on a 30Y Mortgage felling to a record low of 2.65%.

There was never a cheaper time in history to take a loan or refinance your mortgage than in 2021. Image
As a result, most Americans saw their mortgage rates drop well below 4%.

In fact, 55% of homeowners now have rates below 4% and 21% have rates below 3%.

This has created the ultimate "golden handcuffs" moment.

You can't sell your home because you will lose your mortgage rate. Image
Read 13 tweets
The Kobeissi Letter Profile picture
Aug 16
The Trump-Putin meeting has ended:

At 4:46 AM ET, Trump published a statement saying ALL parties want to "go directly to a Peace Agreement."

The implications of a direct peace agreement would be MASSIVE.

Is Trump about to end Europe's deadliest war since WW2?

(a thread) Image
The Alaska meeting was expected to be ONLY between Putin and Trump.

However, Trump says Zelensky was also spoken with in a "late night call" along with EU leaders, including the NATO Secretary General.

This has led to a meeting on Monday and Zelensky is coming to the US. Image
Prior to the meeting, Trump said failure to reach a peace deal would have economic implications.

He said he would likely penalize buyers of Russian oil, including China, if talks failed.

Now, Trump said "I don't think I have to think of possible increase in tariffs on China." Image
Read 13 tweets
The Kobeissi Letter Profile picture
Aug 14
This is unprecedented:

Core CPI inflation is back above +3% and PPI inflation is at its hottest since March 2022.

Meanwhile, President Trump is calling for a 300 BASIS POINT rate cut and is set to replace Fed Chair Powell.

Are you ready for what's next?

(a thread) Image
This week's inflation data was not ideal.

Core CPI inflation is now up to 3.1% and both headline and Core PPI inflation are above 3.0%.

As seen in the below chart, per Zerohedge, PPI inflation is clearly re-accelerating.

But, here's where it gets even more interesting. Image
The question has shifted from IF the Fed will cut rates.

It is now, HOW MANY rate cuts will we get?

As shown below, there is now a 94% chance of a rate cut in September 2025 with markets pricing in a BASE CASE of 3 cuts in 2025.

This comes as inflation is rebounding. Image
Read 13 tweets

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