by On Monday, cryptocurrencies displayed resilience, rebounding from an initial downturn that mirrored a broader recovery in risk assets. This recovery came as traders digested the implications of Moody’s recent downgrade of U.S. government bonds. Bitcoin (BTC), the largest cryptocurrency by market cap, rebounded impressively after dropping to a low of $102,000 earlier in the U.S. trading session, following its record weekly close of $106,600. In afternoon trading, Bitcoin climbed back up to $105,000, marking a 0.4% increase over the past 24 hours.
Alongside Bitcoin, Ether (ETH) also saw gains, rising by 1.2% to reclaim the critical $2,500 level. Notably, the DeFi lending platform Aave (AAVE) outperformed many large-cap altcoins, while most members of the CoinDesk 20 Index remained in the red, despite recovering from their daily lows. Other cryptocurrencies, including Solana (SOL), Avalanche (AVAX), and Polkadot (DOT), experienced declines between 2% to 3%.
Market Reaction to U.S. Credit Downgrade
The early pullback in both crypto and stock markets was attributed to Moody’s decision late Friday to downgrade the U.S. credit rating from its long-held AAA status. This downgrade rattled bond markets, pushing 30-year Treasury yields above 5% and the 10-year note to over 4.5%. However, some analysts have downplayed the downgrade’s long-term effects on asset prices. Ram Ahluwalia, CEO of Lumida Wealth, stated, “What does [the downgrade
