Main takeout:
Bitcoin suggests that it recovers from a rapid sale at $ 107,000 and serves as a hedge to the uncertainty of investors who respond to the downgrade of Moody’s recent US debt.
MOODY ‘S has lowered its US credit rating to AA1, citing $ 36 trillion in debt and shortage, causing a surge in market turbulence and US financial yields.
Despite the short -term pressure due to the macroeconomic change, Bitcoin’s long -term prospects are optimistic due to cautious paragraphs and weakening US dollars.
Bitcoin (BTC) prices faced 4%modifications in the “important level” mentioned in GlassNode on May 19 in the Asian trading session. According to the data analysis platform, Bitcoin’s surge has stopped at less than $ 106,600, an important level of 31,000 BTC. The supply cluster, formed on December 16, 2024, reflects the company’s guilty ruling because it is not sold or average, despite price fluctuations.
The decline in the price of the BTC occurred after the strengthening of the macroeconomic headwinds, and speculation on risky assets such as Bitcoin’s short -term trajectory was raised due to the historical downward revision of the US credit rating and the increase in US financial yields.
MOODY ‘s Credit Downgrade Spooks Market
After the US market closed on May 16, Moody’s Investors Service recorded its first downgrade in modern history by lowering its US credit rating from AAA to AA1. MOODY ‘S cited concerns about debt files of $ 36 trillion in the United States, and the federal deficit is expected to reach 9%of GDP by 2035, and increased from 6.4%in 2024.
Interest payment for US debt is expected to consume 30%of federal income by 2035, which has increased significantly in 18%. According to the similar measures of S & P in 2011 and FITCH in 2023, this downgrade emphasizes the US’s continuous financial channels, reducing investors’ trust and contributing to the market turbulence.
The downgrade also had a bigger impact on the market, consistent with the surge in the US Treasury yield. The 10 -year financial yield began at 5.53%after the fall of May 19, and the 30 -year return has now surpassed a similar trend of 4.98%, and investors reflect concerns about the increase in the US government’s borrowing costs.
Kobeissi Newsletter has historically emphasized that the downgrade of the past has caused a mixed yield. This time, the return spike is a fear of inflation and fiscal tensions by reflecting 2023 patterns, which is likely to contribute to the price revision of Bitcoin in search of more safer assets.
Related: BTC price risk is $ 100K breakdown, so Bitcoin Bulls should be ‘Longs’
Does short -term pain move to the long -term benefit of Bitcoin?
On May 19, Bitcoin’s price dump reflects the sensitivity of the macroeconomic change. Bitcoin can face continuous pressure in the short term to make assets more safer due to uncertainty and borrowing costs.
But Xel Adler Jr., a researcher at X’s Bitcoin, emphasized the change in market sentiment, and a person who bet on the price drop pointed out that when he built a short position during this bull cycle compared to 2021, he was “more careful.” This suggests a long -term prospect of strength when bears avoid risks.
Historically, Bitcoin has served as a safe refuge in economic turmoil such as the Covid-19 crisis, and in particular, it can benefit in the long term by eroding trust in the Fiat system due to deterioration of the US fiscal outlook.
The US dollar index (DXY) announces its potential reduction of less than $ 100, which reflects the weak dollar that caused a classic “danger” response. This change has arisen in interest in gold, which has been conquered a wide range of market responses, but increased 0.4%. In general, the dollar drug strengthens risk assets such as Bitcoin because investors find alternative value storage. Adler JR said.
In general, despite the general “dangerous-off” emotions (generally the headwinds for high-voltage assets), Bitcoin can be relatively stronger in the current environment due to the “digital gold” story and weak dollar support effect.
Related: $ 107K fake or new all -time high? 5 things to know in Bitcoin this week
This article does not include investment advice or recommendation. All investment and trading measures include risks, and the reader must do his own research when making a decision.