Bitcoin ignores Moody’s US debt downgrade, rallies back to $105K after profit-taking sell-off

The main dishes to remember:

• Bitcoin has recovered from its net sale of $ 107,000, which suggests that it operates as coverage against uncertainty for investors reacting to the recent downside of Moody of American debt.

• Moody’s demoted the American credit note to AA1, citing a debt of 36 billions of dollars and an increase in deficits, causing market turbulence and a peak in yields of the American treasury.

• Despite the short-term pressure of macroeconomic changes, the long-term Bitcoin perspectives remain optimistic due to a cautious short circuit and a weakening US dollar.

The price of Bitcoin (BTC) was faced with a net correction of 4% during the Asian negotiation session on May 19, going from an “important level” as indicated by Glassnode. The data analysis platform indicated that Bitcoin overvoltage was blocked just below $ 106,600, a critical level where 31,000 BTCs are held. This tender cluster, trained on December 16, 2024, reflects the conviction for holders of the company, because investors have neither sold nor on average despite price fluctuations.

The drop in BTC prices occurred after the macroeconomic winds intensified, with a historic demarcation of the American Credit of Moody’s and an increase in yields of the American Treasury, which increases speculation on risk assets such as the short -term Bitcoin trajectory.

Moody’s US Credit Downragrade Spooks Markets

After the closure of the US markets on May 16, the Moody investor service lowered the USAA American credit note to AA1, marking the first demotion of modern history. Moody’s cited the concerns of the debt heap of 36 billions of dollars in the United States, with federal deficits provided by GDP by 2035, against 6.4% in 2024.

Interest payments on American debt should consume 30% of federal income by 2035, a significant increase of 18%. After similar actions of S&P in 2011 and Fitch in 2023, this demotion underlines the unbearable budgetary of the United States, the confidence of investors wrapping and contributing to the turbulence of the market.

The demotion has also coincided with an increase in yields of the US Treasury, which has an impact on the markets. The 10 -year -old treasury yield opened at 5.53% after downgrars on May 19, while the 30 -year yield has followed a similar rise, currently at 4.98%, reflecting the concerns of investors concerning higher borrowing costs for the US government.

The Kobeissi newsletter stressed that, historically, downsates have led to mixed yield reactions – the areas dropped by 35% after the degradation of the S&P 2011, but increased by 23% after the Fitch gradient in 2023. This time, the point of yield reflects the 2023 model, signaling fears of inflation and budgetary tension, which probably contributed At the correction of Bitcoin prices, investors looked for safer assets.

Related: Bitcoin Bulls must “be careful with long” because the BTC price risks $ 100,000

Will short-term pain go to a long-term gain for Bitcoin?

The emptying of bitcoin prices on May 19 reflects its sensitivity to macroeconomic changes. Bitcoin could face continuous short -term pressure while investors rotate safer assets in an increase in uncertainty and loan costs.

However, the Bitcoin Axel Adler Jr. researcher on X has highlighted a change of feeling of the market, noting that Paris traders on price reductions were “much more cautious” in the construction of short positions during this bull cycle compared to 2021.

Historically, Bitcoin served as a refuge during economic disorders, such as the COVVI-19 crisis, and could benefit in the long term from the erodation of confidence in Fiat systems, in particular with the American tax perspectives deteriorating.

The US dollar index (DXY) signals a potential decline below $ 100, reflecting a weakening dollar which sparked a classic “risk” response. This change has rekindled interest in gold, which saw a modest increase of 0.4%, although wider market reactions remain moderate. As a rule, a lower dollar strengthens risk assets such as Bitcoin, as investors are looking for other value reserves. Adler Jr said,

“Overall, despite the feeling of dominant” risk “(generally a headwind for high volatility assets), bitcoin can be found in a relatively higher position in the current environment because of its” digital gold “story and the support effect of a lower dollar.”

Related: $ 107,000 in false or new heights of all time? 5 things to know in Bitcoin this week

This article does not contain investment advice or recommendations. Each investment and negotiation movement involves risks and readers should conduct their own research when they make a decision.