Bitcoin Emerges as a Safe-Haven Asset Amid US Credit Rating Downgrade

Moody’s Investors Service has downgraded the United States’ long-term credit rating from Aaa to Aa1, marking the first such demotion in history. This decision, driven by deteriorating fiscal discipline and projected federal deficits reaching 9% of GDP by 2035, has intensified discussions about Bitcoin’s role as a hedge against sovereign credit risk. As of May 17, 2025, Bitcoin’s price stands at 103,240.69 USDT, reflecting its growing appeal as a safe-haven asset. The downgrade underscores the fragility of traditional financial systems and highlights Bitcoin’s potential to serve as a decentralized alternative in times of economic uncertainty. This development further solidifies the narrative of Bitcoin as a store of value amidst global fiscal instability.

Moody’s Downgrade of US Credit Rating Fuels Bitcoin Safe-Haven Narrative

Moody’s Investors Service has stripped the United States of its pristine Aaa credit rating, downgrading long-term obligations to Aa1. The May 16 decision marks the first such demotion in history, citing deteriorating fiscal discipline as federal deficits threaten to balloon to 9% of GDP by 2035.

The MOVE spotlights Bitcoin’s emerging role as a hedge against sovereign credit risk. While Moody’s maintains a stable outlook based on dollar hegemony, the rating cut underscores systemic vulnerabilities that drive capital toward decentralized alternatives.

BlackRock Bitcoin ETF Sees Record $410M Inflows Amid Market Divergence

BlackRock’s spot bitcoin ETF (IBIT) dominated US fund flows with a $410 million single-day influx—the largest across all domestic BTC ETFs. The product now commands $45.4 billion in cumulative inflows since launch, underscoring unwavering institutional demand.

While BlackRock added 3,975 BTC to its holdings in a single session, competing funds faced notable outflows. This divergence highlights shifting capital allocations among institutional players as Bitcoin consolidates above key psychological levels.

The ETF’s performance reinforces Bitcoin’s maturation as a macro asset. ’When the world’s largest asset manager accumulates BTC at this scale, it’s no longer speculation—it’s portfolio strategy,’ said a market Maker at Coinbase who requested anonymity.

Bitcoin Holds Near Record Highs Amid Derivative Pressures, Breakout Potential Intact

Bitcoin (BTC) remains entrenched NEAR all-time highs, oscillating between $100,000 and $105,000 as derivatives activity tempers upward momentum. On-chain metrics reveal underlying strength, with 99% of addresses currently profitable—a condition historically preceding major price expansions.

Fidelity Digital Assets data identifies 10 high-volatility, high-profitability trading sessions in May alone. Such clusters have previously coincided with breakout rallies, notably the post-2020 US election surge. Yet the cryptocurrency continues to face stiff resistance above $105,000, with closing prices largely confined to a $94,000-$105,000 band.

Bitwise CIO Signals Bitcoin Shock: 95% Owned, Few Buyers Involved

Bitwise Chief Investment Officer Matt Hougan has highlighted a critical supply-demand imbalance in the Bitcoin market. Approximately 95% of Bitcoin’s total supply is already held by investors, leaving only 5% remaining for new entrants. Meanwhile, Hougan notes that 95% of global investable capital remains untapped by Bitcoin exposure.

This stark divergence sets the stage for potential price volatility. As institutional adoption accelerates, the dwindling supply could collide with surging demand. "Scarcity amplifies while demand rises," Hougan observed, suggesting a textbook setup for upward price pressure.

The analysis underscores Bitcoin’s maturation as an institutional asset class. With spot ETFs gaining traction and corporate treasuries allocating to digital assets, the remaining liquid supply faces mounting buy-side pressure. Market mechanics suggest this convergence may drive Bitcoin’s next major valuation reset.

Saudi Central Bank’s Indirect Bitcoin Exposure Through Strategy Stake Sparks Debate

The Saudi Central Bank has disclosed a 25,656-share stake in Strategy Inc., the corporate Bitcoin holder formerly known as MicroStrategy. This investment creates indirect exposure to cryptocurrency markets through Strategy’s treasury reserve of 568,840 BTC ($68 billion).

Strategy continues consolidating its position as a bellwether for institutional crypto adoption, with Bitcoin now serving as its primary treasury asset. The Saudi investment reflects growing sovereign interest in cryptocurrency exposure through regulated corporate vehicles rather than direct holdings.