Decoding BTC's "unconventional surge": when interest rates rise, the dollar depreciates and the trillion-dollar deficit

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ODAILY
07-15
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Original Author: The Kobeissi Letter (@KobeissiLetter)

Compiled by | Odaily (@OdailyChina)

Translator | Ethan (@ethanzhang_web3)

Editor's Note: This is not another bull market replication, but a Bitcoin "crisis trend" erupting amid fiscal deficit floods, US dollar depreciation, and financial order reconstruction. When gold and BTC simultaneously surge, Wall Street ETF funds rush in, and even "conservative" funds no longer hesitate, we must admit: the market is entering an unprecedented new cycle. Why is Bitcoin the winner in this "unconventional" macroeconomic context? Is this wave of rise a bubble, a hedge, or a repricing of power? Odaily will help you see the direction capital is truly betting on.

Original Text

The current market situation is far from "normal".Bitcoin's rise can be described as crazy, currently soaring along a steep linear trajectory.Interest rates continue to rise, the US dollar has depreciated by 11% in six months, and the total crypto market value has surged by one trillion dollars in just three months.

What exactly is happening? The answer is clear: Bitcoin has entered "crisis mode".

Bitcoin's momentum is so fierce that it can refresh its all-time high (ATH) multiple times in a single day. Since the US House of Representatives passed the "Big and Beautiful Act" on July 3rd, Bitcoin's price has surged by $15,000.If gold fails to raise an alarm, Bitcoin's wild rise should be enough to sound the warning.

Is there a more obvious signal? Look at the trend comparison between Bitcoin and the US Dollar Index ($DXY) from the beginning of the year,there are two obviousdivergence points:

  • April 9th (90-day tariff suspension period ended)

  • July 1st (when the "Big and Beautiful Act" was passed)

Everything is self-evident.

Entering July, market data shows that the United States recorded a fiscal deficit of $316 billion in May 2025 alone.This is the third-highest monthly deficit level in history. Initially, the market had expectations due to Musk's opposition to the spending bill.

However, this hope quickly faded in early July.

At the time, Bitcoin's rise seemed to benefit from market expectations of a trade agreement.But it turned out thatregardless of whether the trade agreement was announced, the market results were surprisingly consistent: bond yields rose, Bitcoin soared, the US dollar fell, and gold increased.

This is far from a "normal" market condition. We had anticipated and captured this trend in advance:We decisively bought at $80,000, $90,000, and $100,000 pullbacks and precisely predicted a target price of $115,000.

Last Friday, we further raised our target to over $120,000 - a level that has just been reached.

This is undoubtedly a double boost for gold and Bitcoin.

From the beginning of the year, the S&P 500 index has fallen 15% when calculated in Bitcoin. Looking back to 2012, the S&P 500 index calculated in Bitcoin has plummeted by an astonishing 99.98%.The current situation is:Bitcoin's value is soaring, while the US dollar's value is shrinking.

Let me emphasize again, closely monitor the US fiscal deficit.

More importantly, institutional funds seem to be rushing in and chasing this Bitcoin trend.

The assets under management (AUM) of Bitcoin ETF IBIT have rapidly climbed to a record $76 billion in less than 350 days. In comparison, the world's largest gold ETF GLD took over 15 years to reach the same scale.

In our in-depth discussions with institutional investors, we noticed a recurring consensus: broadly speaking, family offices, hedge funds, and other institutional capitals can no longer ignore Bitcoin.Even "conservative" funds are considering allocatingabout 1% of their assets under management (AUM) to Bitcoin.

It should be noted that when we say Bitcoin has entered "crisis mode", we are not bearish on other assets. In fact, the short-term "stimulus" effect of more deficit spending is "favorable",and risk assets may continue to rise in the short term.

Of course, its long-term negative impacts cannot be ignored.

Ironically, as long as the deficit problem is solved, the United States' multiple challenges will be resolved.It could lower interest rates, suppress inflation, and boost the US dollar.But Bitcoin "knows well" that this is almost impossible - just look at how its momentum accelerated after the spending bill was passed.

The changes in the economic landscape are precisely the opportunities for investors. As the market gradually digests this ongoing deficit spending crisis, capital is undergoing large-scale rotation, and asset prices are consequently experiencing violent fluctuations.

Lastly, interestingly, according to ZeroHedge, Ethereum's leveraged short positions are currently at an all-time high.This is similar to what weobserved before the market bottomed out in April 2025.

Is a large-scale crypto market short squeeze about to unfold? Things may be brewing...

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Disclaimer: The content above is only the author's opinion which does not represent any position of Followin, and is not intended as, and shall not be understood or construed as, investment advice from Followin.
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