World Crypto Global
- Written by: Olivia Stephanie
- Mon, 19 May 2025
- United States
Bitcoin edged lower on Monday following a major shift in investor sentiment after Moodys Ratings downgraded the U.S. sovereign credit rating. The credit rating agency reduced the United States long-standing Aaa rating to Aa1, citing rising fiscal pressure due to the $36 trillion national debt and growing interest obligations. The decision marked Moodys first U.S. downgrade since assigning its top-tier rating over a century ago in 1919.The timing of the downgrade coincided with Bitcoins pullback from its four-month peak. After hitting an overnight high of $107,060 and recording its strongest-ever weekly close near $106,500, the crypto declined to $102,200 during the session. Over the past 24 hours, Bitcoins value dropped by 1.29%, wiping out its weekly gains. The retreat highlighted a shift in risk appetite, with investors responding to heightened fiscal uncertainty by reducing exposure to speculative assets.However, responding to the downgrade, White House spokesperson Kush Desai criticized Moodys credibility, referencing perceived inaction during the prior administration.Meanwhile, Treasury Secretary Scott Bessent downplayed the immediate impact of the decision, calling it a lagging indicator with minimal influence on fiscal planning.https://twitter.com/MarzellCrypto/status/1924466142501830889Derivatives Activity Signals Heightened VolatilityAmid the broader market reaction, Bitcoin derivatives markets experienced a notable surge in activity. Trading volume spiked by 137.84% to $164.24 billion, signaling increased speculative interest. Despite this, open interest grew only 0.95% to $69.85 billion, suggesting rapid position turnover rather than long-term commitments.Bitcoin Liquidation DataBitcoin Derivatives DataLiquidation data underscored this volatility. Over a 12-hour window, total liquidations reached $48.28 million, with long positions accounting for $40.77 million. Across 24 hours, $156.92 million in total positions were liquidated, $87.20 million in longs and $69.72 million in shorts.Greater Volatility Incoming?Moodys downgrade follows similar actions by Fitch Ratings in 2023 and Standard & Poors in 2011. Analysts noted that the cumulative effect of these downgrades may contribute to higher borrowing costs for both the public and private sectors in the United States. This may lead to greater volatility in financial markets.Spencer Hakimian of Tolou Capital Management reported that the downgrade could translate into long-term financial strain across markets, potentially raising the cost of capital.While this development temporarily disrupted Bitcoins rally toward a new all-time high, crypto industry commentators remain largely unfazed by the short-term pullback. Notably, there have been renewed calls for the beginning of altcoin season and predictions of a continued Bitcoin rally to as high as $250,000 by influential figures such as Arthur Hayes.Interestingly, MicroStrategys Michael Saylor also disclosed a fresh, multi-million-dollar Bitcoin acquisition today. This signals continued institutional confidence in the asset despite macroeconomic headwinds.
Why Is Bitcoin Falling Today? Here is The Likely Reason
Bitcoin edged lower on Monday following a major shift in investor sentiment after Moodys Ratings downgraded the U.S. sovereign credit rating. The credit rating agency reduced the United States long-standing Aaa rating to Aa1, citing rising fiscal pressure due to the $36 trillion national debt and growing interest obligations. The decision marked Moodys first U.S. downgrade since assigning its top-tier rating over a century ago in 1919.The timing of the downgrade coincided with Bitcoins pullback from its four-month peak. After hitting an overnight high of $107,060 and recording its strongest-ever weekly close near $106,500, the crypto declined to $102,200 during the session. Over the past 24 hours, Bitcoins value dropped by 1.29%, wiping out its weekly gains. The retreat highlighted a shift in risk appetite, with investors responding to heightened fiscal uncertainty by reducing exposure to speculative assets.However, responding to the downgrade, White House spokesperson Kush Desai criticized Moodys credibility, referencing perceived inaction during the prior administration.Meanwhile, Treasury Secretary Scott Bessent downplayed the immediate impact of the decision, calling it a lagging indicator with minimal influence on fiscal planning.https://twitter.com/MarzellCrypto/status/1924466142501830889Derivatives Activity Signals Heightened VolatilityAmid the broader market reaction, Bitcoin derivatives markets experienced a notable surge in activity. Trading volume spiked by 137.84% to $164.24 billion, signaling increased speculative interest. Despite this, open interest grew only 0.95% to $69.85 billion, suggesting rapid position turnover rather than long-term commitments.
