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The Kobeissi Letter Profile picture
@KobeissiLetter
Feb 25, 2025 • 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
Jun 25
What just happened?

In just 27 minutes, the Nasdaq 100 just fell -1,000 points and the S&P 500 erased -$1 TRILLION without any major headlines.

The Nasdaq opened +1% higher then fell -3% between 9:30 AM and 9:57 AM ET.

What does it all mean? Let us explain.

(a thread) Image
Take a look at the chart below.

At 8:30 AM ET, PCE inflation came in at 4.1%, which was followed by the Apple price hike news.

At 9:30 AM ET, the Nasdaq 100 was up nearly +1%, then fell -3.5% before 10 AM ET on minimal news.

Dip buyers are now attempting to form a bottom. Image
First, PCE inflation is now officially up to 4.1%, the highest since April 2023.

Inflation is more than double the Fed's 2.0% target, and PCE is the Fed's preferred metric.

But, this news did NOT drive markets lower today.

In fact, futures were higher after the data. Image
Read 13 tweets
The Kobeissi Letter Profile picture
Jun 5
What just happened?

The S&P 500 just erased nearly -$2 TRILLION of market cap just hours after 3rd strongest US jobs report in 18 months.

Meanwhile, Bitcoin is officially down over -50% from its record high in October 2025.

What's happening? Let us explain.

(a thread) Image
Just 3 days ago, the S&P 500 hit its highest level on record as AI stocks skyrocketed.

Today, the S&P 500 posted its largest drop since October 2025.

Meanwhile, the biggest news of the day was the 3rd strongest jobs report in 18 months.

This has left many investors confused. Image
In fact, even President Trump commented on the decline after the jobs report.

Trump said “stocks should go up, not down” after today’s jobs report.

However, when you look beneath the surface, it's fairly clear that stock do NOT want a strong labor market over the near-term. Image
Read 12 tweets
The Kobeissi Letter Profile picture
May 19
Bond markets are flashing red.

Today, the US 30Y Note Yield officially hit its highest level since July 2007, at 5.19%.

This will soon become Americans’ biggest problem, yet the vast majority do not even know it is happening.

What is happening? Let us explain.

(a thread) Image
First, it is truly incredible how quickly we ended up in this situation.

Prior to the Iran War, yields were finally dropping after years of persistent inflation.

The 10Y Note Yield was down to 3.92%. 80 days later, it is up +75 basis points.

That is a MASSIVE move in yields. Image
In the early days of the Iran War, US Treasury Yields moved higher, but the move was largely contained.

Consensus was that the Iran War would be brief and the Strait of Hormuz would not remained closed.

Today, both Iran and the US have closed Hormuz and traffic remains near 0. Image
Read 12 tweets
The Kobeissi Letter Profile picture
Apr 20
It's official:

The world is now experiencing its biggest energy crisis in history, with 600 MILLION barrels of lost oil supply.

US gas prices are up +47% since December and inflation is nearing 4% in a similar path to the 1970s.

What happens next? Let us explain.

(a thread) Image
Today marks day 51 of the Iran War.

With ~600 million barrels of lost oil supply, ~$50 billion ​worth of oil has been removed from the global market.

This is the same amount of fuel it takes to run the world's international shipping industry for 4 months.

Truly unprecedented. Image
And, the US actually has it good.

Jet fuel prices in Europe surged over +100% amid the Iran War's disruption.

New data shows Europe has just 6 weeks worth of jet fuel remailing with many flights set to be cancelled.

Europe is urging people to work from home to conserve fuel. Image
Read 12 tweets
The Kobeissi Letter Profile picture
Mar 19
Global oil markets are out of control:

As the Iran War closes week 3, US oil prices are trading at $97/barrel, up +76% since December.

Meanwhile, physical oil prices in Oman are up to a RECORD $167/barrel, a +72% PREMIUM.

What is happening? Let us explain.

(a thread) Image
This chart compares Brent (global oil) to WTI Crude (US oil).

When the Iran War began on February 28th, US oil prices surged toward $120/barrel while Brent lagged, trading at a ~20% discount to WTI Crude.

However, just two weeks later, and Brent hit a +15% premium to US oil. Image
In fact, Brent's premium over WTI Crude is trading at its widest margin in 11+ years.

And, it gets worse. Oman's oil prices are at $167, Dubai's at $137, and Brent at $113, while WTI Crude sits at $97, per Zerohedge.

Never have we seen such a massive divergence, but why? Image
Read 12 tweets
The Kobeissi Letter Profile picture
Feb 28
The Strait of Hormuz situation:

Reuters is now reporting that Iran is notifying vessels that it is CLOSING the Strait of Hormuz.

If officially closed, 20+ MILLION barrels of oil PER DAY will be impacted, or 20% of global supply.

What's next? Let us explain.

(a thread) Image
The Strait of Hormuz, between Oman and Iran, connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.

This body of water controls ~20% of the world’s petroleum liquids consumption.

In other words, ONE FIFTH of global oil consumption flows through here EVERY DAY. Image
After US strikes on Iran last night, ships in the Strait of Hormuz are now receiving warnings.

As of 12:30 PM ET, the US has recommended ships avoid the Strait of Hormuz.

In their 2025 analysis, JP Morgan described this as their worst case scenario in an Israel-Iran war. Image
Read 13 tweets

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