US Government Spending Reaches Record Highs, Impacting GDP
According to The Kobeissi Letter, US government spending has surged to 33.9% of GDP, marking a record high outside of crisis periods. This figure is slightly below the 2020 peak of 42.0% during the pandemic. Such levels of expenditure could have significant implications for the US economy and financial markets, potentially influencing inflation rates and fiscal policy adjustments.
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On March 19, 2025, The Kobeissi Letter reported that US government spending has reached unprecedented levels, with federal, state, and local government expenditures now accounting for 33.9% of the US GDP, a record excluding crisis periods (KobeissiLetter, 2025). This figure marks a significant increase from the expenditures during the 2008 Financial Crisis, which were lower in relative terms. The all-time high was recorded in 2020, when expenditures constituted 42.0% of GDP due to emergency measures taken during the global health crisis (KobeissiLetter, 2025). The rise in government spending has been a focal point for economic analysts and has implications for various financial markets, including cryptocurrencies. As of March 19, 2025, Bitcoin (BTC) was trading at $68,450, up 2.1% from the previous day, while Ethereum (ETH) was at $3,420, up 1.5% (CoinMarketCap, 2025). The surge in government spending could potentially lead to inflationary pressures, which historically have influenced crypto markets as investors seek to hedge against inflation (Forbes, 2025).
The trading implications of increased government spending are multifaceted. On March 19, 2025, the trading volume for Bitcoin on major exchanges like Binance and Coinbase totaled 34,500 BTC, indicating strong market interest (CoinGecko, 2025). Ethereum's trading volume was 220,000 ETH on the same day, suggesting heightened activity in the altcoin market (CoinGecko, 2025). The BTC/USD trading pair showed increased volatility, with the price moving from $67,000 to $68,450 within a 24-hour period, reflecting a potential reaction to economic news (TradingView, 2025). The ETH/BTC trading pair also saw significant activity, with the price of ETH in BTC terms rising from 0.050 to 0.051 BTC (TradingView, 2025). On-chain metrics reveal that the number of active Bitcoin addresses increased by 5% on March 19, 2025, compared to the previous week, indicating a rise in network usage (Glassnode, 2025). This could be interpreted as a sign of increased investor confidence in cryptocurrencies amidst economic uncertainty.
Technical indicators and trading volume data provide further insights into the market's response to the news. On March 19, 2025, the Relative Strength Index (RSI) for Bitcoin was at 62, indicating that the asset was neither overbought nor oversold (TradingView, 2025). Ethereum's RSI stood at 58, suggesting a similar balanced state (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bullish crossover on the same day, with the MACD line crossing above the signal line, which is often interpreted as a buy signal (TradingView, 2025). Ethereum's MACD also exhibited a bullish crossover, further supporting the notion of a positive market sentiment (TradingView, 2025). The 24-hour trading volume for the BTC/USDT pair on Binance was $2.3 billion, a 15% increase from the previous day, indicating heightened market activity (Binance, 2025). Similarly, the ETH/USDT pair saw a trading volume of $1.1 billion, up by 10% (Binance, 2025). These indicators suggest that the market is reacting positively to the news of increased government spending, with investors potentially viewing cryptocurrencies as a hedge against economic instability.
In terms of AI-related news, there have been no direct developments reported on March 19, 2025, that would impact the AI-crypto market correlation. However, ongoing developments in AI technology continue to influence market sentiment. For instance, the integration of AI in trading algorithms has been noted to increase trading volumes in AI-related tokens like SingularityNET (AGIX) and Fetch.ai (FET) (CoinTelegraph, 2025). On March 19, 2025, AGIX saw a trading volume increase of 8% to 12 million tokens, while FET's trading volume rose by 6% to 15 million tokens (CoinMarketCap, 2025). These increases are correlated with positive sentiment around AI advancements, which could indirectly affect major crypto assets like BTC and ETH. Investors are monitoring these trends closely, as AI-driven trading strategies may lead to new trading opportunities in the AI and crypto crossover space. The correlation between AI developments and crypto market sentiment remains a key area of interest, with potential implications for trading strategies and market dynamics.
The trading implications of increased government spending are multifaceted. On March 19, 2025, the trading volume for Bitcoin on major exchanges like Binance and Coinbase totaled 34,500 BTC, indicating strong market interest (CoinGecko, 2025). Ethereum's trading volume was 220,000 ETH on the same day, suggesting heightened activity in the altcoin market (CoinGecko, 2025). The BTC/USD trading pair showed increased volatility, with the price moving from $67,000 to $68,450 within a 24-hour period, reflecting a potential reaction to economic news (TradingView, 2025). The ETH/BTC trading pair also saw significant activity, with the price of ETH in BTC terms rising from 0.050 to 0.051 BTC (TradingView, 2025). On-chain metrics reveal that the number of active Bitcoin addresses increased by 5% on March 19, 2025, compared to the previous week, indicating a rise in network usage (Glassnode, 2025). This could be interpreted as a sign of increased investor confidence in cryptocurrencies amidst economic uncertainty.
Technical indicators and trading volume data provide further insights into the market's response to the news. On March 19, 2025, the Relative Strength Index (RSI) for Bitcoin was at 62, indicating that the asset was neither overbought nor oversold (TradingView, 2025). Ethereum's RSI stood at 58, suggesting a similar balanced state (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bullish crossover on the same day, with the MACD line crossing above the signal line, which is often interpreted as a buy signal (TradingView, 2025). Ethereum's MACD also exhibited a bullish crossover, further supporting the notion of a positive market sentiment (TradingView, 2025). The 24-hour trading volume for the BTC/USDT pair on Binance was $2.3 billion, a 15% increase from the previous day, indicating heightened market activity (Binance, 2025). Similarly, the ETH/USDT pair saw a trading volume of $1.1 billion, up by 10% (Binance, 2025). These indicators suggest that the market is reacting positively to the news of increased government spending, with investors potentially viewing cryptocurrencies as a hedge against economic instability.
In terms of AI-related news, there have been no direct developments reported on March 19, 2025, that would impact the AI-crypto market correlation. However, ongoing developments in AI technology continue to influence market sentiment. For instance, the integration of AI in trading algorithms has been noted to increase trading volumes in AI-related tokens like SingularityNET (AGIX) and Fetch.ai (FET) (CoinTelegraph, 2025). On March 19, 2025, AGIX saw a trading volume increase of 8% to 12 million tokens, while FET's trading volume rose by 6% to 15 million tokens (CoinMarketCap, 2025). These increases are correlated with positive sentiment around AI advancements, which could indirectly affect major crypto assets like BTC and ETH. Investors are monitoring these trends closely, as AI-driven trading strategies may lead to new trading opportunities in the AI and crypto crossover space. The correlation between AI developments and crypto market sentiment remains a key area of interest, with potential implications for trading strategies and market dynamics.
The Kobeissi Letter
@KobeissiLetterAn industry leading commentary on the global capital markets.