Moody's downgraded the U.S. sovereign credit rating from Aaa to Aa1, with the outlook adjusted to 'stable.' S&P downgraded the U.S. rating from AAA to AA+ in 2011. Fitch downgraded the U.S. rating from AAA to AA+ in August 2023, with an outlook of 'stable.' The U.S. has lost all AAA top ratings from the three major credit rating agencies. Federal Reserve's Williams stated that inflation has been slowly and gradually declining, tariffs may push up inflation and U.S. unemployment rates, and the outlook will become clearer after June and July.
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U.S. Senators Bill Hagerty and Kirsten Gillibrand stated that legislation for U.S. regulation of stablecoin issuers (GENIUS Act) may enter the debate and passage phase this week. Bo Hines, Executive Director of the President's Digital Asset Advisory Committee, indicated that the main purpose of the (GENIUS Act) is to safeguard the future of U.S. finance, modernize the outdated payment systems in the U.S., and digital asset technology represents the next generation of the financial system, with the U.S. ready for this transformation. The New York Federal Reserve and the Bank for International Settlements (BIS) jointly released a research report, Project Pine, testing the feasibility of implementing monetary policy through smart contracts in tokenized financial markets. The report pointed out that smart contracts have the capability to quickly deploy and adjust monetary policy tools, providing flexibility and efficiency for future central bank policy execution in tokenized financial systems, but also emphasized the need to pay attention to interoperability, data standards, and potential operational risks. The Washington Post reported that no media or photography equipment was allowed at the TRUMP dinner held on May 22. The U.S. House group approved the Trump tax cut bill in preparation for a possible vote this week. Last Thursday, Trump's comprehensive tax bill faced obstacles in Congress.
Metaplanet increased its holdings by 1,004 BTC, bringing total holdings to 7,800 BTC. El Salvador has increased its holdings by 31 BTC in the last 30 days, for a total of 6,180.18 BTC. Analyst Daan Crypto Trades stated that recent trends show a CB spot premium, which is a positive sign indicating solid demand. Arthur Hayes indicated that the altcoin season is coming, needing to wait for BTC to break through $110,000 and continue to rise to the $150,000 to $200,000 range, and this situation is expected to occur in the summer or early Q3, after which there will be a rotation into various altcoins; in the bull market over the next 18 to 24 months, ETH's increase may surpass SOL; by the end of this year, BTC's target price is around $250,000. CryptoQuant reported that the ETH/BTC ratio has fallen to a historically rare range, and historically, whenever this indicator reaches such low levels, ETH has seen significant increases. Currently, ETH/BTC has rebounded significantly, indicating that investors are betting that the market has reached its bottom, and the altcoin season may be coming soon. Analyst Apsk32 noted that BTC usually follows gold higher after several months of gold rising, with gold reaching a new high of $3,500 per ounce; if BTC continues to progress along the momentum curve and gold maintains its current price, while BTC returns to the leading support level it has maintained for five years, the target price for BTC in 2025 could be around $220,000.
Last week, U.S. BTC spot ETFs saw cumulative inflows of $608 million, while U.S. ETH spot ETFs saw cumulative inflows of $41.8 million. According to DefiLlama data, the total market capitalization of stablecoins reached $243.838 billion, growing 0.45% over the past 7 days. Strategy increased its holdings by 7,390 BTC during the period from May 12 to May 18, at a price of $103,498, totaling $764.9 million. The U.S. Securities and Exchange Commission (SEC) released FAQs related to crypto asset activities and distributed ledger technology, covering broker-dealer custody rules, physical purchases of crypto spot ETFs, net capital treatment for BTC and ETH, and rules for transfer agents of tokenized securities. Texas's Strategic BTC Reserve bill (SB 21) will undergo its second reading in the House on May 20, which is a necessary step before the final vote. If the bill passes the full House vote before the Texas Legislature adjourns on June 2, it will be submitted to the governor for signing. Moody's downgraded the U.S. sovereign credit rating from Aaa to Aa1, with the outlook adjusted to 'stable.' The downgrade was attributed to the rising ratio of U.S. government debt and interest payments, with the fiscal deficit expected to approach 9% of GDP by 2035.
The U.S. has lost all AAA top ratings from the three major credit rating agencies. S&P downgraded the U.S. rating from AAA to AA+ in 2011, with no further changes since then. Fitch placed the U.S. AAA rating on 'negative watch' on May 24, 2023, warning that the debt ceiling crisis could lead to default risks, and on August 1, 2023, downgraded the U.S. rating from AAA to AA+, with an outlook of 'stable.' Federal Reserve Vice Chairman Clarida stated that Moody's downgrade will be viewed as normal data in policy-making. Federal Reserve's Bostic mentioned that Moody's downgrade of the U.S. rating will impact the entire economy and financial markets, affecting the cost of capital, and they will observe the impact of the downgrade on U.S. Treasury demand. Federal Reserve's Williams indicated that inflation has been slowly and gradually declining, the economy may slow down this year, and the Federal Reserve can remain composed in monetary policy decisions, with tariffs potentially pushing up inflation and unemployment rates, and the outlook becoming clearer after June and July. Matrixport reported that as phase-down risks ease, the upward path for BTC becomes clearer, and risk assets, especially BTC, are expected to usher in a favorable window before July, coinciding with the end of the 90-day tariff suspension agreement, the start of the second-quarter earnings season, and another important catalyst is the initiation of the debt repayment process by FTX around May 30, targeting accounts with debt amounts exceeding $50,000, with an estimated issuance of about $5 billion in stablecoins expected to drive market momentum in June, potentially extending into the summer.
On Monday, U.S. stock indices saw the Nasdaq open down nearly 1%, with intraday losses narrowing to 0.05%; the S&P 500 index turned up 0.01%, and the Dow Jones increased by 0.2%. BTC rose by 0.2%, and ETH increased by 0.4%. U.S. Treasury bonds depreciated, with the 10-year Treasury yield rising to 4.5% and the 30-year yield rising to 5%. BitMEX co-founder Arthur Hayes stated that the spike in the 10-year Treasury yield has 'reminded' that if the MOVE volatility index is predicted, the printing machine is expected to start running. Trump continued to criticize Powell, stating that the market consensus is that the Federal Reserve should lower interest rates, but Powell is likely to mess it up again. Factors such as Moody's ratings, U.S. Treasury depreciation, inflationary pressures, and economic slowdown combined indicate that if U.S. inflation continues its current trend (April's CPI at 3%) in May, June, and July, it could be interpreted as momentum for market trends and pressure on U.S. monetary policy/Federal Reserve. An interesting scene: Bitcoin is stubbornly holding near its historical high waiting for a catalyst, and Ethereum is also not weak, while altcoins are looking forward. Wishing for a smooth summer.