Moody’s historic reduction of US credit rating might boost Bitcoin’s appeal as a safe haven.

Moody’s made a significant move on May 16 by lowering the long-term credit rating of the United States from Aaa to Aa1, marking an unprecedented instance where the agency has downgraded the US from its highest rating.

The agency attributed this decision to a decade marked by climbing debt levels, increasing interest obligations, and a persistent lack of effective deficit management by lawmakers.

Moody’s forecasts that federal deficits will dramatically increase in the near future, potentially hitting 9% of GDP by 2035, up from 6.4% in 2024, driven by mounting spending commitments and rising interest payments that take up a larger share of the federal budget.

While Moody’s currently maintains a “stable” outlook, highlighting the dollar’s role as a global reserve currency and the size of US financial markets, the downgrade represents a notable shift in how global markets view US creditworthiness.

This action follows earlier reductions by S&P in 2011 and Fitch in 2023, resulting in the US lacking a top credit rating for the first time in recent financial history.

Market reactions were relatively subdued, with Treasury yields experiencing a slight increase. However, the long-term consequences, particularly for institutional investments that assume US debt as risk-free, may extend over time.

Bitcoin (BTC) remained stable above $100,000 amid ongoing macroeconomic uncertainties, reinforcing its position as a non-sovereign safeguard against fiscal unpredictability.

As of the latest updates, Bitcoin was trading at $103,591, reflecting a 0.15% increase over the previous 24 hours. In contrast, many major altcoins encountered selling pressure and volatility in response to the news.

Historically, during the last US rating downgrade in 2023, Bitcoin and stocks exhibited resilience. While this trend might recur, caution persists regarding potential sell-offs at the opening on Monday.

The flagship cryptocurrency’s stability diverges from the traditional view of cryptocurrencies as higher-risk assets, indicating a growing number of investors view Bitcoin as a strategic option during times of economic uncertainty.

Industry experts regard Bitcoin’s pricing stability post-downgrade as further proof that its reputation as a safe haven is taking hold among investors.

As centralized monetary systems face trust issues, there seems to be a growing willingness for capital to shift toward decentralized alternatives grounded in technology, scarcity, and network dynamics, rather than relying on government assurances.

At the latest report timestamp of 12:21 am UTC on May 17, 2025, Bitcoin holds the #1 position by market cap, with a price increase of 0.23% over the past day. Bitcoin’s market cap stands at $2.06 trillion, accompanied by a 24-hour trading volume of $28.75 billion.

As of the same timestamp, the overall crypto market is valued at $3.3 trillion, with a 24-hour volume of $102.33 billion, and Bitcoin’s dominance currently at 62.33%.