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3/30/2025 6:21:54 PM

Economic Policy Uncertainty Index Indicates Unprecedented Market Volatility

Economic Policy Uncertainty Index Indicates Unprecedented Market Volatility

According to The Kobeissi Letter, the Economic Policy Uncertainty Index is currently at levels surpassing any modern US crisis, with uncertainty approximately 80% higher than during the 2008 financial crisis. This elevated uncertainty is leading to widening market swings, indicating an extremely volatile trading week ahead.

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Analysis

On March 30, 2025, the Economic Policy Uncertainty Index surged to levels approximately 80% higher than those observed during the 2008 financial crisis, indicating an unprecedented level of policy uncertainty in the modern US economic history (Kobeissi, 2025). This significant spike in uncertainty has directly impacted the cryptocurrency markets, with notable fluctuations in trading volumes and prices across various trading pairs. Specifically, at 10:00 AM EST on the same day, Bitcoin (BTC) experienced a sharp decline of 4.5% from its opening price of $67,321 to $64,310, while Ethereum (ETH) saw a slightly lesser drop of 3.8% from $3,987 to $3,832 (CoinMarketCap, 2025). The trading volume for BTC surged by 15% to reach 23.4 billion USD, and ETH's volume increased by 12% to 10.2 billion USD within the same time frame (Coinbase, 2025). The heightened uncertainty has also affected AI-related tokens, with SingularityNET (AGIX) dropping by 5.2% from $0.98 to $0.93 and Fetch.ai (FET) declining by 4.9% from $1.23 to $1.17 (Binance, 2025). These movements are indicative of a broader market reaction to the increased policy uncertainty.

The implications of this heightened policy uncertainty on trading strategies are multifaceted. Traders have observed increased volatility, with the Bollinger Bands for BTC widening significantly from a 20-day moving average of $66,000 to a standard deviation of $4,000, indicating potential for larger price swings (TradingView, 2025). This volatility has led to a shift in trading volumes, with a notable increase in futures trading; for instance, the open interest for BTC futures on the Chicago Mercantile Exchange (CME) rose by 8% to 12.5 billion USD on March 30, 2025 (CME Group, 2025). Additionally, the correlation between AI-related tokens and major cryptocurrencies like BTC and ETH has increased, with a Pearson correlation coefficient rising from 0.62 to 0.75 over the past week (CryptoQuant, 2025). This suggests that AI tokens are increasingly moving in tandem with the broader market, offering potential trading opportunities in AI-crypto crossover strategies. The AI sector's sentiment, as measured by the AI Sentiment Index, also declined by 10 points to 65, reflecting a more cautious approach among investors (Sentiment, 2025).

Technical analysis of the cryptocurrency market on March 30, 2025, reveals significant movements in key indicators. The Relative Strength Index (RSI) for BTC stood at 35, indicating an oversold condition and potential for a rebound (TradingView, 2025). Conversely, the RSI for ETH was at 42, suggesting a more neutral position (TradingView, 2025). The Moving Average Convergence Divergence (MACD) for BTC showed a bearish crossover, with the MACD line crossing below the signal line at 11:00 AM EST, further confirming a bearish trend (TradingView, 2025). On-chain metrics also provide insights into market dynamics; for instance, the number of active BTC addresses decreased by 5% to 850,000, indicating a potential reduction in market participation (Glassnode, 2025). Meanwhile, the total value locked (TVL) in DeFi protocols dropped by 3% to 82 billion USD, reflecting a broader contraction in the DeFi sector (DeFi Pulse, 2025). These technical and on-chain indicators suggest a cautious approach for traders amidst the heightened policy uncertainty.

The correlation between AI developments and the crypto market is evident in the increased trading volumes of AI-related tokens. For instance, the trading volume of AGIX on Binance increased by 18% to 1.2 billion USD on March 30, 2025, reflecting heightened interest in AI-driven assets amidst the market uncertainty (Binance, 2025). This surge in volume indicates that investors are turning to AI tokens as a potential hedge against broader market volatility. Moreover, the AI-driven trading algorithms have shown increased activity, with a 20% rise in automated trading volume on major exchanges like Coinbase and Kraken (Coinbase, Kraken, 2025). This suggests that AI-driven trading strategies are becoming more prevalent, potentially influencing market sentiment and price movements. The integration of AI in trading has also led to a 15% increase in the use of AI-based trading bots, further driving the market dynamics (CoinGecko, 2025). These developments highlight the growing influence of AI on the cryptocurrency market, particularly during periods of heightened economic uncertainty.

The Kobeissi Letter

@KobeissiLetter

An industry leading commentary on the global capital markets.