How will the downgrade of the US credit rating (Moody’s) affect the crypto market?
1. Event context
- What happened: Moody’s downgraded the US credit rating from AAA to AA1 (first time since 1994) due to rising government debt (forecast: 134% of GDP by 2035).
- Reason: Concerns about fiscal sustainability and political inability to control the deficit.
- Historical precedent: In 2011, S&P also downgraded the US rating → back then BTC was worth $10, but later began a multi-year rise.
2. Impact on cryptocurrencies
🔺 Negative effects (short-term)
- Panic in traditional markets:
- Investors may temporarily move to cash (USD) or government bonds, which will weaken demand for risky assets (including BTC).
- Pressure on Nasdaq → BTC correction (correlation ~80% with tech stocks).
- Strengthening of the dollar (DXY):
- If investors perceive this as a systemic crisis, USD may temporarily rise → pressure on BTC/USD.
🔻 Positive scenarios (mid to long-term)
- BTC as an alternative to the 'unreliable' dollar:
- Cryptocurrencies can serve as a hedge against inflation and debt crisis (as in 2020-2021).
- Rise of 'de-dollarization' → capital inflow into BTC and gold.
- Weakness of the Fed:
- Moody’s directly pointed out risks for the economy → the Fed may soften its rhetoric on rates → liquidity increase → positive for crypto.
⚡ Development options
- 1-2 weeks: Volatility, a possible BTC correction to $100-102K (support test).
- 3-6 months: If the trust crisis in the dollar strengthens, BTC could soar to $120-150K (demand as 'digital gold').
3. What should investors do?
- Short-term:
- Don't panic. Wait for market reaction: if BTC holds $103K, it's a signal of strength.
- Watch DXY and Nasdaq. Dollar growth – a threat, decline – an opportunity for BTC.
- Mid-term:
- Accumulation on corrections. Levels for buying: $100-102K (if tested).
- Diversification. Altcoins may drop more than BTC – it's better to focus on leaders (ETH, SOL).
- Long-term:
- Hold. Dollar crisis – a fundamental driver for BTC in 2025-2030.
4. Risks
- Liquidity crash: If panic spreads to all markets, crypto may fall along with stocks.
- Fed's reaction: If the regulator ignores risks and maintains a tight policy, pressure on BTC will continue.
Conclusion
In the short term – pressure on BTC, but in the long term – a strong bullish signal.
- Weakness in the US = increased demand for decentralized assets.
- The main thing is to survive the possible volatility of the next 2-4 weeks.
Advice: Buy on fears if you believe in Bitcoin's mission. For traders – prepare for scalping in a wide range ($100-106K).
