- Moody’s downgrades US credit rating; affects crypto markets immediately.
- ETH, XRP, DOGE each fall 3%.
- Risk-off sentiment impacts both crypto and traditional markets.
ETH, XRP, and DOGE experienced a 3% drop following Moody’s downgrade of the U.S. credit rating from Aaa to Aa1.
Impact on Crypto and Traditional Markets
Moody’s Investors Service reduced the U.S. credit rating, citing rising debt and interest payments as pivotal issues. President Trump’s administration labeled the move as politically motivated. “Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” noted Moody’s in their official statement.
Crypto assets like Ethereum, XRP, and Dogecoin responded with a 3% drop, highlighting a broad risk-off sentiment. Such reactions are not an isolated event but align with historical precedents of market volatility during similar downgrades.
Traditional markets were also impacted. The U.S. 10-year Treasury yield rose to 4.49%, accompanied by a fall in S&P 500 futures. These movements underscore the broader financial stress following the credit downgrade and highlight the interconnected nature of financial markets.
Analysts note that while the credit downgrade initially leads to risk aversion, historical trends suggest a shift as investors consider crypto as potential hedges against fiat concerns. This shift emerges gradually as narratives evolve post-downgrade events.
Major project leaders in the crypto space, such as Ethereum’s Vitalik Buterin, have yet to comment. Meanwhile, uncertainty looms as markets and regulatory bodies assess potential ramifications on fiscal policy and crypto’s role as a financial instrument.
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