According to Lex Sokolin, Bitcoin (BTC) emerges as a direct response to persistent issues in the traditional financial system, including credit default swaps, fractional reserve banking, negative interest rates, and unlimited money printing. These systemic risks highlight the role of BTC as a decentralized alternative, offering transparent and finite monetary policy. For traders, Sokolin's analysis suggests that Bitcoin's value proposition is strengthened during periods of financial instability, potentially driving higher demand and price volatility in the crypto markets. Source: Lex Sokolin.

According to The Kobeissi Letter, credit markets are now pricing US credit as if it were rated BBB+, which is six notches below its official AA+ rating, and just three levels above non-investment grade status (source: The Kobeissi Letter, June 18, 2025). This repricing is evident in credit default swap (CDS) market data and reflects growing investor concerns over the US fiscal outlook. For cryptocurrency traders, this elevated perception of US credit risk could fuel volatility across crypto markets, as traditional investors may seek alternative assets like BTC and ETH during periods of financial instability. Monitoring the CDS spreads and their correlation with BTC price action can provide valuable trading signals.

According to The Kobeissi Letter, the cost of insuring US government debt via 1-year credit default swaps (CDS) has surged to 52 basis points, marking the highest level since the 2023 debt ceiling crisis and the highest in 12 years excluding that event (source: The Kobeissi Letter, May 31, 2025). This elevated default risk has triggered renewed market volatility, leading traders to seek alternative assets like Bitcoin and stablecoins as hedges against potential US Treasury instability. Rising CDS premiums indicate growing concerns over US fiscal stability, which historically correlates with increased capital flows into the cryptocurrency market as investors look for safe-haven assets in times of sovereign risk.