Moody’s Cuts Rating Over $36 Trillion Debt: Here is Why That’s Bullish for Crypto
In a landmark decision, Moody’s Investors Service downgraded the United States' sovereign credit rating from Aaa to Aa1 on Friday, citing unsustainable fiscal deficits and a towering $36 trillion national debt.
The downgrade — the first from Moody’s in over a century — comes at a time of deepening political gridlock and rising interest obligations, raising alarm among global investors.
“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s stated, even as it shifted the outlook to “stable.”
With this downgrade, all three major credit agencies have now stripped the U.S. of its once-unquestioned top-tier rating.
Market and Political Reaction
Though the downgrade was announced after markets closed Friday, it pushed Treasury yields higher, signaling investor concern. Stocks remained resilient into the weekend, but volatility may resurface when markets reopen.
The move drew sharp criticism from figures aligned with President Donald Trump, who returned to office in January promising fiscal reform.
“Outrageous,” said Trump’s former economic adviser Stephen Moore. “If a U.S.-backed bond isn’t AAA, what is?”
The White House’s Steven Cheung called out Moody’s economist Mark Zandi, labeling him a political opponent — though Zandi, part of Moody’s Analytics (a separate entity), declined to comment.
Despite ambitious efforts from Trump’s Department of Government Efficiency, headed by Elon Musk, to reduce waste and curb spending, results have fallen short. Meanwhile, new tariffs aimed at boosting revenue have fueled global trade concerns.
Why This Matters for Crypto
The downgrade has serious implications for fiat confidence — and potential upside for Bitcoin and other digital assets:
- Loss of Trust in Traditional Systems: When the world’s largest economy can no longer maintain its top credit rating, it erodes trust in government-backed assets like Treasury bonds and fiat currencies.
- Bitcoin as a Hedge: Bitcoin, with its fixed supply and decentralization, is increasingly viewed as a hedge against inflation, debt-driven fiat devaluation, and political dysfunction.
- Institutional Diversification: As risk increases in traditional markets, institutional and sovereign investors may accelerate diversification into crypto assets to preserve long-term value.
“Events like this reinforce Bitcoin’s narrative as digital gold,” said a portfolio strategist at a major asset management firm. “For investors looking for stability outside the fiat system, crypto becomes more attractive.”
Looking Ahead
While this downgrade may not cause an immediate collapse, it’s a clear warning: the U.S. debt trajectory is unsustainable, and trust in its fiscal management is waning.
Whether Congress responds with serious reform — or continues down the path of rising deficits — one thing is clear: crypto markets are watching closely, and the long-term investment case for digital assets just got stronger.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
