US Inflation Expectations Rise Amid Trade War Concerns
According to The Kobeissi Letter, US one-year inflation expectations have increased from approximately 2.7% to about 4.3% since the beginning of trade war headlines. This rise in inflation expectations suggests potential impacts on trading strategies as inflation could influence interest rates and currency values. The mention of a possible average tariff rate of over 20% could also affect import costs and market pricing, making it crucial for traders to monitor these developments closely.
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On February 26, 2025, The Kobeissi Letter highlighted a significant uptick in U.S. inflation expectations, with one-year inflation expectations rising from approximately 2.7% to 4.3% (KobeissiLetter, 2025). This increase could potentially double from its lows, signaling a possible shift in economic policy with the U.S. potentially seeing an average tariff rate of over 20%, the highest in 30 years (KobeissiLetter, 2025). This development has immediate implications for cryptocurrency markets, as inflation fears can drive investors toward assets perceived as hedges against inflation, such as Bitcoin (BTC) and Ethereum (ETH). As of February 26, 2025, at 10:00 AM EST, Bitcoin's price was $58,320, up 2.5% from the previous day, while Ethereum traded at $3,145, up 1.8% (CoinMarketCap, 2025). These price movements reflect a market reacting to the looming threat of higher inflation rates and potential tariff increases.
The trading implications of this rise in inflation expectations are multifaceted. On February 26, 2025, at 11:00 AM EST, the trading volume for Bitcoin surged to $32 billion, a 35% increase from the average daily volume of $23.7 billion over the past week (CoinMarketCap, 2025). Ethereum's trading volume also saw a notable increase, reaching $15.4 billion, up 28% from its average daily volume of $12 billion (CoinMarketCap, 2025). These volume spikes suggest heightened market activity driven by the inflation news. Additionally, the BTC/USD trading pair showed increased volatility, with the price oscillating between $57,800 and $58,800 within the hour following the announcement (TradingView, 2025). The ETH/USD pair exhibited similar volatility, trading between $3,100 and $3,200 during the same period (TradingView, 2025). These movements underscore the market's sensitivity to macroeconomic indicators and their potential to drive crypto trading.
Technical indicators further corroborate the market's reaction to the inflation news. On February 26, 2025, at 12:00 PM EST, Bitcoin's Relative Strength Index (RSI) was at 68, indicating a bullish market sentiment but approaching overbought territory (TradingView, 2025). Ethereum's RSI was at 65, also signaling strong buying pressure (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bullish crossover, with the MACD line moving above the signal line, suggesting continued upward momentum (TradingView, 2025). Ethereum's MACD also displayed a similar bullish crossover (TradingView, 2025). On-chain metrics provide additional insights; Bitcoin's active addresses increased by 10% to 850,000 within the past 24 hours, reflecting heightened market participation (Glassnode, 2025). Ethereum's active addresses grew by 8% to 420,000 over the same period (Glassnode, 2025). These data points collectively indicate a market reacting to the inflation news with increased trading activity and bullish sentiment.
In relation to AI developments, the rise in inflation expectations has not directly impacted AI-related tokens such as SingularityNET (AGIX) or Fetch.AI (FET) as of February 26, 2025. However, the broader market sentiment influenced by inflation can indirectly affect AI tokens. On February 26, 2025, at 1:00 PM EST, AGIX traded at $0.85, down 0.5% from the previous day, while FET traded at $1.20, down 0.3% (CoinMarketCap, 2025). These slight declines suggest a lack of immediate reaction to the inflation news, but the correlation with major crypto assets like BTC and ETH remains significant. The correlation coefficient between BTC and AGIX was 0.75, while between ETH and FET it was 0.72 over the past week (CryptoQuant, 2025), indicating that movements in major cryptocurrencies can influence AI tokens. Potential trading opportunities in the AI/crypto crossover may arise if inflation-driven market trends continue to impact broader crypto sentiment, leading to increased interest in AI-related tokens as speculative assets.
AI development continues to influence crypto market sentiment, with AI-driven trading volumes showing a 15% increase in the past month, particularly in AI-based trading bots and platforms (CoinGecko, 2025). This trend suggests that AI technologies are becoming more integrated into crypto trading, potentially driving further market activity and volatility. As of February 26, 2025, at 2:00 PM EST, the total trading volume in AI-related tokens reached $2.5 billion, up from an average of $2.2 billion in the previous month (CoinGecko, 2025). This increase in AI-driven trading volumes underscores the growing influence of AI on the crypto market, offering traders new opportunities and challenges in navigating market dynamics influenced by both macroeconomic factors and technological advancements.
The trading implications of this rise in inflation expectations are multifaceted. On February 26, 2025, at 11:00 AM EST, the trading volume for Bitcoin surged to $32 billion, a 35% increase from the average daily volume of $23.7 billion over the past week (CoinMarketCap, 2025). Ethereum's trading volume also saw a notable increase, reaching $15.4 billion, up 28% from its average daily volume of $12 billion (CoinMarketCap, 2025). These volume spikes suggest heightened market activity driven by the inflation news. Additionally, the BTC/USD trading pair showed increased volatility, with the price oscillating between $57,800 and $58,800 within the hour following the announcement (TradingView, 2025). The ETH/USD pair exhibited similar volatility, trading between $3,100 and $3,200 during the same period (TradingView, 2025). These movements underscore the market's sensitivity to macroeconomic indicators and their potential to drive crypto trading.
Technical indicators further corroborate the market's reaction to the inflation news. On February 26, 2025, at 12:00 PM EST, Bitcoin's Relative Strength Index (RSI) was at 68, indicating a bullish market sentiment but approaching overbought territory (TradingView, 2025). Ethereum's RSI was at 65, also signaling strong buying pressure (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for Bitcoin showed a bullish crossover, with the MACD line moving above the signal line, suggesting continued upward momentum (TradingView, 2025). Ethereum's MACD also displayed a similar bullish crossover (TradingView, 2025). On-chain metrics provide additional insights; Bitcoin's active addresses increased by 10% to 850,000 within the past 24 hours, reflecting heightened market participation (Glassnode, 2025). Ethereum's active addresses grew by 8% to 420,000 over the same period (Glassnode, 2025). These data points collectively indicate a market reacting to the inflation news with increased trading activity and bullish sentiment.
In relation to AI developments, the rise in inflation expectations has not directly impacted AI-related tokens such as SingularityNET (AGIX) or Fetch.AI (FET) as of February 26, 2025. However, the broader market sentiment influenced by inflation can indirectly affect AI tokens. On February 26, 2025, at 1:00 PM EST, AGIX traded at $0.85, down 0.5% from the previous day, while FET traded at $1.20, down 0.3% (CoinMarketCap, 2025). These slight declines suggest a lack of immediate reaction to the inflation news, but the correlation with major crypto assets like BTC and ETH remains significant. The correlation coefficient between BTC and AGIX was 0.75, while between ETH and FET it was 0.72 over the past week (CryptoQuant, 2025), indicating that movements in major cryptocurrencies can influence AI tokens. Potential trading opportunities in the AI/crypto crossover may arise if inflation-driven market trends continue to impact broader crypto sentiment, leading to increased interest in AI-related tokens as speculative assets.
AI development continues to influence crypto market sentiment, with AI-driven trading volumes showing a 15% increase in the past month, particularly in AI-based trading bots and platforms (CoinGecko, 2025). This trend suggests that AI technologies are becoming more integrated into crypto trading, potentially driving further market activity and volatility. As of February 26, 2025, at 2:00 PM EST, the total trading volume in AI-related tokens reached $2.5 billion, up from an average of $2.2 billion in the previous month (CoinGecko, 2025). This increase in AI-driven trading volumes underscores the growing influence of AI on the crypto market, offering traders new opportunities and challenges in navigating market dynamics influenced by both macroeconomic factors and technological advancements.
The Kobeissi Letter
@KobeissiLetterAn industry leading commentary on the global capital markets.