Bitcoin Rebounds as Markets Shake Off Moody’s US Credit Downgrade

Cryptocurrencies recovered Monday after a shaky start, mirroring broader risk asset gains as investors digested Moody’s downgrade of U.S. government bonds. Bitcoin (BTC) dipped as low as $102,000 in early U.S. trading but rebounded to $105,000 by the afternoon, up 0.4% in 24 hours. The recovery followed BTC’s record weekly close at $106,600. Ether (ETH) also bounced back, gaining 1.2% to surpass the $2,500 mark.

DeFi token Aave (AAVE) outperformed large-cap altcoins, while Solana (SOL), Avalanche (AVAX), and Polkadot (DOT) remained down 2%-3% despite clawing back from earlier lows. U.S. equities followed suit, with the S&P 500 and Nasdaq erasing morning losses.

The initial sell-off came after Moody’s downgraded the U.S. credit rating from AAA, pushing 30-year Treasury yields above 5% and 10-year yields past 4.5%. Still, analysts downplayed the long-term impact. Ram Ahluwalia, CEO of Lumida Wealth, said the downgrade would have minimal market impact, though short-term selling in Treasuries was expected as some institutional investors rebalanced portfolios to meet AAA mandates.

Callie Cox of Ritholtz Wealth Management noted on X that the downgrade had been long anticipated, which likely limited its effect on stocks.

Meanwhile, digital asset manager 21Shares forecast a bullish outlook for Bitcoin. Analyst Matt Mena expects BTC could hit $138,500 in 2025, driven by institutional inflows, a historic supply crunch, and favorable macro conditions. Spot Bitcoin ETFs are absorbing more BTC than is mined daily, tightening supply further. Companies like Strategy, Twenty One Capital, and even governments are accumulating BTC as part of strategic reserves, reinforcing the bullish case for a sustained rally toward new all-time highs.