Crypto Markets Show Strength as Ether Surges 8% and Bitcoin Nears $106K Amid Moody’s U.S. Credit Downgrade Fallout
Despite Moody’s recent downgrade of the U.S. credit rating, the cryptocurrency market has demonstrated notable resilience, with ether (ETH) rallying 8% and bitcoin (BTC) edging back toward the $106,000 level over the last 24 hours. This performance contrasts sharply with declines seen in equities and gold.
The downgrade, attributed to ongoing fiscal deficits and political stalemates, triggered a risk-off reaction across traditional markets last Friday. Equities slipped, while gold continued a downward trend, dropping nearly 7% from its May highs. In contrast, bitcoin held firm, briefly surging to $107,000 on Sunday before easing back slightly.
“Bitcoin’s weekend rally, despite a risk-averse environment following Moody’s downgrade, underscores its growing acceptance as a credible store of value,” noted QCP Capital in a Telegram update Monday evening. The firm highlighted steady inflows into spot bitcoin ETFs and robust institutional interest as key drivers, even as some leveraged longs were liquidated in derivatives markets.
Ether led the charge among altcoins, breaking past $2,900 in a sustained rally following last week’s breakout. The surge has been linked to renewed enthusiasm for Ethereum staking and positive market sentiment after the Pectra upgrade, although no fresh headlines emerged on Monday.
Other notable gains included Solana’s SOL, XRP, BNB Chain’s BNB, and Dogecoin (DOGE), each climbing between 2% and 4%. The broad CoinDesk 20 Index (CD20) rose just under 2% during the same period.
Aave’s AAVE token posted a remarkable 25% gain within 24 hours, though this appeared driven more by speculative trading than any protocol developments or governance proposals. Despite this spike, AAVE remains down over 60% from its peak in 2021.
Market observers are paying close attention to the divergence between bitcoin and traditional “hard assets” like gold.
“Unlike recent months when BTC and gold moved in tandem, bitcoin is now rising even as spot gold declines — a trend visible in ETF flows as well,” said Augustine Fan of SignalPlus. “Gold ETFs have seen significant outflows, while BTC ETFs recorded modest inflows. A similar pattern is evident in futures markets on CME. We expect more such micro-correlation breaks and opportunities for relative value trades going forward,” he added.
