Key Takeaways:
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Bitcoin recovered from sharp sale-offs from $ 107,000, suggesting that it works as a fence against uncertainty for investors responding to the recent US debt collapse.
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Moody lowered the US credit rating to AA1, citing a $ 36 trillion debt and increasing deficiencies, causing market disturbance and a spike in US Treasury’s yields.
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Despite short-term pressure from macroeconomic shifts, Bitcoin’s long-term perspective remains bullish due to careful rotation and a weakening US dollar.
Bitcoin (BTC) The price faced a sharp 4% correction during the Asian trading session on May 19, falling from a “important level” as Glassnode noted. The data platform analytics indicated Bitcoin’s progress was stuck below the $ 106,600, a critical level by which 31,000 BTC was held. This supply cluster, formed on December 16, 2024, reflects the firm’s belief in the hold, as investors have not been sold or did not fall despite the change of price.
BTC price collapse occurred after the macroeconomic headwinds intensified, with a historical collapse of the US credit credit rating by Moody’s and an increase in the US treasury yield, which increases speculation around the risk of risk as the Bitcoin’s near term.
Moody’s US Credit Dowgrade Spooks Markets
After closing the US markets on May 16, the Moody service lowered the moody service of US credit rating from AAA to AA1, which marked the first collapse in modern history. Moody noted US balloon concerns of $ 36 trillion debt pile, with federal deficiencies expected to reach 9% of GDP by 2035, from 6.4% in 2024.
Interest payments for US debt are expected to consume 30% of federal income by 2035, a significant increase from 18%. Following the similar actions of S&P in 2011 and Fitch in 2023, this fall emphasizes the unstable path of the US fiscal, which is angering the investor’s confidence and contributing to the market chaos.
The collapse also coincides with a promotion of US Treasury produce, which further affects markets. Treasury’s 10-year harvest opened to the 5.53% post-downgrade on May 19, while the 30-year yield followed a similar upward trend, currently at 4.98%, reflecting investor concerns at higher borrowing costs for the US government.
The Kobeissi Newsletter Highlighting That is historically, the previous falls led to mix -up yield reactions – silly fell 35% after the S&P collapse in 2011 but rose 23% after Fitch’s 2023 collapse. At this time, the Ani Spike reflects the 2023 pattern, signs of fear of inflation and fiscal strain, which has probably contributed to the correction of bitcoin prices as investors sought safer owners.
Related: Bitcoin Bulls should ‘take care of Longs’ because BTC price risks are $ 100k breakdown
Is the short -term gain shift in the long -term benefit for Bitcoin?
Bitcoin price collapse on May 19 reflects its sensitivity to macroeconomic shifts. Bitcoin may face ongoing pressure in the short term as investors have pivoted the safer owners of the midst of increasing uncertainty and borrowing costs.
However, Bitcoin researcher Axel Adler Jr in X Highlighting A transfer to market sentiment, noting that entrepreneurs who bet price declines are “significantly more careful” in developing short positions during this bull cycle compared to 2021. It suggests a general bullish long -term perspective, as the bear is growing at risk.
Historically, Bitcoin has served as a safe shelter in times of economic disturbance, such as the COVID-19 crisis, and can benefit long-term from eliminating confidence in FIAT systems, especially to the destruction of US prosecutors.
The US Dollar Index (DXY) has signed a potential decline below $ 100, reflecting a weakening dollar that triggers a classic “risk-off” response. This change reigned interest in gold, seeing a moderate 0.4% increase, although greater market reactions remain covered. Usually, a weaker dollar bolsters of risk assets such as Bitcoin, because investors are looking for alternative value stores. Adler JR said,
“Generally, despite existing” risk-off “emotions (usually a headwind for high-part assets), Bitcoin can find itself in a relatively stronger position in the current environment due to the” digital gold “narrative and the support of the impact of a weaker dollar.”
Related: $ 107K fakeout or new all-time highs? 5 things to know in bitcoin this week
This article does not contain investment advice or recommendations. Every transfer of investment and trading involves risk, and readers should conduct their own research when deciding.
