Mehab Qureshi
2 min read
The crypto market took a cautious step back as news broke late Friday that Moody’s Investors Service had downgraded the United States’ sovereign credit rating.
Bitcoin is hovering around $103,014, down 2% in the past 24 hours, while Ethereum is down over 4% for the day. XRP and Solana also saw modest dips. The broader market remains jittery as investors digest the implications of the U.S. losing its triple-A rating.
Moody’s officially cut the U.S. government’s long-standing “Aaa” credit rating by one notch to “Aa1” and changed its outlook from “negative” to “stable.” This marks the first time since 1919 that Moody’s has downgraded the U.S., following similar moves by S&P in 2011 and Fitch in 2023.
In its announcement, Moody’s directly pointed to the country’s rising $36 trillion debt and lack of meaningful fiscal reform. “Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” the agency said.
It added that “the fiscal proposals under consideration were unlikely to lead to a sustained, multi-year reduction in deficits,” warning that the federal debt burden would likely reach 134% of GDP by 2035 — up from 98% in 2024.
Moody’s downgrade of the U.S. credit rating spooked investors and pushed bond yields higher, pressuring risk assets like crypto. Since crypto markets often react to macroeconomic signals, rising fiscal instability in the U.S. can drive short-term volatility. As a decentralized alternative, crypto is increasingly seen as a hedge — but it still remains deeply intertwined with global economic confidence.
This downgrade also triggered immediate market reactions. Bond yields climbed higher, with the U.S. 2-year Treasury yield jumping to 3.993% and the 10-year hitting 4.499%. These rising yields typically reflect growing investor demand for risk premiums on government debt — an environment that’s usually tough on risk assets like crypto.
