Ethereum, Solana, XRP and Bitcoin React to US Credit Downgrade: Increased Volatility and Sideways Market Expected
US equities and major cryptocurrencies including Ethereum (ETH), Solana (SOL), XRP, and Bitcoin (BTC) faced early declines after Moody’s downgraded the US government’s credit rating from AAA to Aa1, citing a growing fiscal deficit and rising financial risks. This marks the first time since 1949 that the US has lost its top credit rating, triggering increased volatility in US Treasury yields—10-year yields rose to 4.5% and 30-year yields surpassed 5%. The downgrade prompted a risk-off sentiment and higher volatility in the altcoin market, reversing previous gains. According to analyst Valentin Fournier, crypto assets are expected to experience sideways movement and accumulation ahead of new macroeconomic data, with core PCE figures due on May 30 potentially providing the next market catalyst. The prevailing outlook is neutral in the short term, with a low risk of sharp declines but a lack of clear bullish drivers unless institutional demand returns or positive macroeconomic shifts occur. Crypto traders are advised to closely monitor macro-financial news and broad market risk sentiment, as these developments add uncertainty to both the regulatory and price environment.
Neutral
The news of the US credit downgrade by Moody’s initially caused declines and increased volatility in major cryptocurrencies and equities, but the market quickly stabilized. Analysts highlight that such downgrades historically do not result in sustained higher rates or long-term price declines. With a lack of immediate bullish catalysts and the expectation of sideways or accumulation-phase trading until new macro data is released, the short-term impact is seen as neutral for Ethereum, Solana, XRP, and Bitcoin. There is low risk of sharp downside in the near term, but also low probability of a significant rally unless institutional demand resumes or positive macroeconomic developments emerge.