Bitcoin Consolidates as U.S. Loses triple-A Credit rating
Bitcoin is currently trading at $103,000, a 2.8% dip from its monthly peak, with a market cap of $2.045 trillion. The crypto’s price movement reflects broader macroeconomic trends.
On Friday, Moody’s, a leading credit rating agency, downgraded the U.S. credit rating from Aaa to Aa1. This decision was due to the deteriorating fiscal health of the U.S., which Moody’s flagged a year ago. The U.S. joined a club of countries without a top-tier credit rating after similar cuts by S&P Global in 2011 adn Fitch Ratings in 2022.
Key factors behind the downgrade include soaring public debt,exceeding $36.8 trillion, and increased spending on Medicare, Medicaid, defense, and interest payments.Despite efforts by Elon Musk’s Department of Government Efficiency to cut expenses, analysts predict a limited impact on the budget deficit, partly due to planned tax cuts by the Trump management.
This downgrade could benefit Bitcoin, increasingly seen as a safe haven.Historically, Bitcoin has outperformed the stock market during uncertain times, such as after the Liberation Day speech and during the COVID-19 pandemic.
Supply and demand also favor Bitcoin. Exchange and over-the-counter markets show a falling supply while demand rises. Spot Bitcoin ETFs attracted over $41 billion in inflows as January last year, and major companies continue buying.
Technically, Bitcoin appears poised for gains. Despite recent downtrends in volume, it remains above the 50-day Exponential Moving Average. A bullish pennant and a cup-and-handle pattern suggest a potential breakout and further growth to $110,000 or higher.
