Waking up, the U.S. debt market reacted to Moody's downgrade of the U.S. credit rating, with both 20-year and 30-year yields rising above 5%. U.S. stock futures fell over 1% after the market opened, and market sentiment was clearly affected.
The logic behind the recent BTC rally analyzed last night still seems reasonable. This morning, after the CME opened, Bitcoin surged again, essentially representing short-term volatility during a low liquidity period. The pre-market pullback confirms the lack of substantial positive support over the weekend (only the speech from Bessenet released expectations).
The sharp fluctuations between 4 AM and 6 AM are particularly typical, as a low liquidity environment can easily trigger a double explosion of long and short positions.
The current decline is mainly driven by Asian investors' risk aversion, and the transmission effect during the main trading hours in the U.S. is still unclear. However, historical data shows that downgrades in credit ratings typically have a short-term impact on the market.
Tonight, after the U.S. stock market opens, the long-short game may enter a truly critical phase.
