Moody’s gives US negative credit-rating, that’s good for Bitcoin

Moody’s recently downgraded the U.S. credit rating outlook to “negative” from “stable.” This has led to speculation that Bitcoin could be a safe haven asset for investors looking to hedge against the potential risks of a weakening U.S. economy.

Moody’s Investors Service has indicated a potential downgrade of the U.S.’s top credit rating. The downgrade is attributed to large fiscal deficits, a decline in debt affordability, and continued political polarization within the U.S. Congress.

While the U.S. still maintains an “AAA” rating for the moment, the credit rating agency’s downgrade reflects a growing concerns about the U.S. government’s debt and its inability to handle fiscal responsibilities.

Without measures to cut spending or increase revenue, Moody’s warns, fiscal deficits could persist at a substantial level. This would significantly undermine debt affordability, especially in the face of rising interest rates.

Moody’s decision comes after Fitch Ratings—considered one of three most significant rating agencies in the world (the others being Moody’s and Standard & Poor’s)—downgraded the country’s sovereign rating in August after months of political tension surrounding the U.S. debt ceiling.

Following the downgrade, Bitcoin briefly surged above $30,000.

The downgrade shifted the U.S. out of the category of nations with the highest credit ratings evaluated by Fitch, one of three firms assessing governments and companies’ ability to meet their financial obligations.

Moody’s senior vice president William Foster mentioned that any substantial policy response to address the declining fiscal strength is unlikely to occur until 2025. This delay is attributed to the constraints imposed by the political calendar in the upcoming year.

Moody’s decision to revise the U.S. credit outlook also coincides with heightened fiscal scrutiny, given the escalating national debt levels and political disagreements obstructing agreement on budgetary management.

This has sparked speculation that Bitcoin could serve as a safe haven asset for investo

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Author: Ogwu Osaemezu Emmanuel

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