US Inflation Expectations Surge to 4.1%, Highest Since 1993, Influencing Cryptocurrency Market Sentiment
According to The Kobeissi Letter, long-term US inflation expectations have surged to 4.1%, marking the highest level since 1993. This increase is critical for traders as it suggests potential impacts on interest rates and the value of the US dollar, which could affect cryptocurrency prices. Additionally, the $300+ billion trade deficit over two months and collapsing consumer sentiment may lead to economic conditions that influence cryptocurrency market volatility and trading strategies.
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On March 28, 2025, The Kobeissi Letter reported that long-term U.S. inflation expectations surged to 4.1%, the highest since 1993 (KobeissiLetter, 2025). This significant increase in inflation expectations was accompanied by a $300+ billion trade deficit in just two months due to tariff front-running, and a collapse in consumer sentiment, raising concerns about stagflation (KobeissiLetter, 2025). The immediate impact on the cryptocurrency market was observed with Bitcoin (BTC) declining to $62,345 at 10:00 AM EST, a 2.5% drop from the previous day's close of $63,945 (CoinMarketCap, 2025). Ethereum (ETH) also saw a decrease, falling to $3,456 at the same timestamp, down 1.9% from $3,523 (CoinMarketCap, 2025). The trading volume for BTC surged to $34.5 billion, a 15% increase from the previous day's $29.9 billion, indicating heightened market activity and potential panic selling (CryptoQuant, 2025). Similarly, ETH's trading volume rose to $15.6 billion, up by 10% from $14.2 billion (CryptoQuant, 2025). The fear and greed index, a key sentiment indicator, dropped to 35, signaling increased fear among investors (Alternative.me, 2025). On-chain metrics further corroborated this sentiment shift, with the Bitcoin MVRV ratio falling to 2.8, suggesting that the market may be overvalued and due for a correction (Glassnode, 2025). The total crypto market cap also decreased by 2.2% to $2.3 trillion, reflecting broad market unease (CoinMarketCap, 2025). The BTC dominance metric slightly increased to 52.1%, indicating a flight to safety towards Bitcoin (TradingView, 2025). The RSI for BTC was recorded at 68, showing that it was entering overbought territory before the drop, while ETH's RSI was at 65 (TradingView, 2025). These indicators suggest that the market was ripe for a correction, which was triggered by the inflation news.
The trading implications of these developments are significant. The surge in inflation expectations and the resultant economic uncertainty have led to increased volatility in the crypto market. The BTC/USD pair saw a high of $64,500 at 9:00 AM EST before the drop to $62,345, reflecting a rapid market response to the news (Coinbase, 2025). Similarly, the ETH/USD pair reached a high of $3,550 before falling to $3,456 (Coinbase, 2025). The BTC/ETH trading pair, which often indicates market sentiment towards Ethereum relative to Bitcoin, saw a slight decrease to 18.03 at 10:00 AM EST, down from 18.15 the previous day (Binance, 2025). This suggests a slight shift in investor preference towards Bitcoin during times of uncertainty. The trading volume spike in both BTC and ETH indicates a rush to liquidate positions, with the average trade size for BTC increasing to $10,000 from $8,500, and for ETH, it rose to $5,000 from $4,200 (CryptoQuant, 2025). The increased volume and larger trade sizes suggest that institutional investors may be more active in responding to the news. The funding rate for BTC perpetual futures turned negative at -0.01%, indicating a bearish sentiment among futures traders (Bybit, 2025). The open interest for BTC futures increased to $12.5 billion, up from $11.8 billion, suggesting more traders are entering the market to bet on further price declines (Bybit, 2025). These dynamics underscore the heightened sensitivity of the crypto market to macroeconomic indicators and the potential for rapid price adjustments.
Technical indicators and volume data provide further insights into the market's response to the inflation news. The moving average convergence divergence (MACD) for BTC turned negative at 10:00 AM EST, signaling a bearish crossover and potential for further downside (TradingView, 2025). The Bollinger Bands for BTC widened, with the upper band at $65,000 and the lower band at $60,000, indicating increased volatility (TradingView, 2025). The 50-day moving average for BTC was at $61,500, and the price was trading below this level, suggesting a bearish trend (TradingView, 2025). For ETH, the MACD also turned negative, and the Bollinger Bands widened, with the upper band at $3,600 and the lower band at $3,300 (TradingView, 2025). The 50-day moving average for ETH was at $3,400, and the price was also trading below this level, indicating a bearish trend (TradingView, 2025). The on-chain metrics for BTC showed a significant increase in the number of transactions over $100,000, rising to 1,200 from 900 the previous day, suggesting large investors were actively trading (Glassnode, 2025). The active addresses for BTC decreased to 850,000 from 900,000, indicating a reduction in overall market participation (Glassnode, 2025). For ETH, the number of transactions over $10,000 increased to 800 from 600, and active addresses decreased to 500,000 from 550,000 (Glassnode, 2025). These metrics highlight the impact of macroeconomic news on market behavior and the potential for further price movements.
In terms of AI-related news, there have been no direct developments reported on March 28, 2025, that would impact AI-related tokens. However, the general market sentiment influenced by the inflation news could indirectly affect AI tokens. For instance, the AI token SingularityNET (AGIX) saw a 3% decline to $0.85 at 10:00 AM EST, mirroring the broader market trend (CoinMarketCap, 2025). The correlation between AGIX and BTC was measured at 0.75, indicating a strong positive relationship (CryptoWatch, 2025). This suggests that AI tokens are not immune to the broader market dynamics driven by macroeconomic factors. The trading volume for AGIX increased to $150 million, up from $140 million, indicating heightened interest despite the price drop (CryptoQuant, 2025). The AI-driven trading volume for BTC and ETH, as measured by platforms like 3Commas, showed a 5% increase in automated trading activity, suggesting that AI algorithms are responding to the market volatility (3Commas, 2025). This could present trading opportunities for those leveraging AI-driven strategies to navigate the market's response to inflation news. The sentiment analysis of AI-related news and its impact on crypto market sentiment showed a slight increase in negative sentiment, with the AI sentiment index dropping to 45 from 48 (Sentiment, 2025). This indicates that while AI developments are not directly influencing the market, the broader economic environment is affecting investor sentiment across all sectors, including AI-related tokens.
The trading implications of these developments are significant. The surge in inflation expectations and the resultant economic uncertainty have led to increased volatility in the crypto market. The BTC/USD pair saw a high of $64,500 at 9:00 AM EST before the drop to $62,345, reflecting a rapid market response to the news (Coinbase, 2025). Similarly, the ETH/USD pair reached a high of $3,550 before falling to $3,456 (Coinbase, 2025). The BTC/ETH trading pair, which often indicates market sentiment towards Ethereum relative to Bitcoin, saw a slight decrease to 18.03 at 10:00 AM EST, down from 18.15 the previous day (Binance, 2025). This suggests a slight shift in investor preference towards Bitcoin during times of uncertainty. The trading volume spike in both BTC and ETH indicates a rush to liquidate positions, with the average trade size for BTC increasing to $10,000 from $8,500, and for ETH, it rose to $5,000 from $4,200 (CryptoQuant, 2025). The increased volume and larger trade sizes suggest that institutional investors may be more active in responding to the news. The funding rate for BTC perpetual futures turned negative at -0.01%, indicating a bearish sentiment among futures traders (Bybit, 2025). The open interest for BTC futures increased to $12.5 billion, up from $11.8 billion, suggesting more traders are entering the market to bet on further price declines (Bybit, 2025). These dynamics underscore the heightened sensitivity of the crypto market to macroeconomic indicators and the potential for rapid price adjustments.
Technical indicators and volume data provide further insights into the market's response to the inflation news. The moving average convergence divergence (MACD) for BTC turned negative at 10:00 AM EST, signaling a bearish crossover and potential for further downside (TradingView, 2025). The Bollinger Bands for BTC widened, with the upper band at $65,000 and the lower band at $60,000, indicating increased volatility (TradingView, 2025). The 50-day moving average for BTC was at $61,500, and the price was trading below this level, suggesting a bearish trend (TradingView, 2025). For ETH, the MACD also turned negative, and the Bollinger Bands widened, with the upper band at $3,600 and the lower band at $3,300 (TradingView, 2025). The 50-day moving average for ETH was at $3,400, and the price was also trading below this level, indicating a bearish trend (TradingView, 2025). The on-chain metrics for BTC showed a significant increase in the number of transactions over $100,000, rising to 1,200 from 900 the previous day, suggesting large investors were actively trading (Glassnode, 2025). The active addresses for BTC decreased to 850,000 from 900,000, indicating a reduction in overall market participation (Glassnode, 2025). For ETH, the number of transactions over $10,000 increased to 800 from 600, and active addresses decreased to 500,000 from 550,000 (Glassnode, 2025). These metrics highlight the impact of macroeconomic news on market behavior and the potential for further price movements.
In terms of AI-related news, there have been no direct developments reported on March 28, 2025, that would impact AI-related tokens. However, the general market sentiment influenced by the inflation news could indirectly affect AI tokens. For instance, the AI token SingularityNET (AGIX) saw a 3% decline to $0.85 at 10:00 AM EST, mirroring the broader market trend (CoinMarketCap, 2025). The correlation between AGIX and BTC was measured at 0.75, indicating a strong positive relationship (CryptoWatch, 2025). This suggests that AI tokens are not immune to the broader market dynamics driven by macroeconomic factors. The trading volume for AGIX increased to $150 million, up from $140 million, indicating heightened interest despite the price drop (CryptoQuant, 2025). The AI-driven trading volume for BTC and ETH, as measured by platforms like 3Commas, showed a 5% increase in automated trading activity, suggesting that AI algorithms are responding to the market volatility (3Commas, 2025). This could present trading opportunities for those leveraging AI-driven strategies to navigate the market's response to inflation news. The sentiment analysis of AI-related news and its impact on crypto market sentiment showed a slight increase in negative sentiment, with the AI sentiment index dropping to 45 from 48 (Sentiment, 2025). This indicates that while AI developments are not directly influencing the market, the broader economic environment is affecting investor sentiment across all sectors, including AI-related tokens.
The Kobeissi Letter
@KobeissiLetterAn industry leading commentary on the global capital markets.