From Yahoo Finance: 2025-05-17 14:19:00

The crypto market took a step back as Moody’s downgraded the U.S. credit rating, with Bitcoin at $103,014 and Ethereum down over 4%. XRP and Solana also saw dips as investors digest implications of the U.S. losing its triple-A rating.

Moody’s cut the U.S. government’s long-standing “Aaa” credit rating to “Aa1” due to rising debt and lack of fiscal reform, marking the first downgrade since 1919. This move follows similar actions by S&P in 2011 and Fitch in 2023.

Moody’s pointed to the U.S.’s $36 trillion debt and lack of fiscal reform, warning that federal debt could reach 134% of GDP by 2035. The agency criticized the lack of measures to reduce deficits and growing interest costs.

The U.S. credit downgrade spooked investors, pushing bond yields higher and impacting risk assets like crypto. Rising fiscal instability in the U.S. can drive short-term volatility in the crypto market, despite its reputation as a decentralized hedge.

Moody’s downgrade led to higher bond yields, with the U.S. 2-year Treasury yield at 3.993% and the 10-year at 4.499%. These rising yields reflect growing investor demand for risk premiums on government debt, creating a challenging environment for risk assets like crypto.

Read more: Markets reel after Moody’s strips US of perfect credit score again