Fitch downgraded the
United States to AA+ from AAA, citing fiscal deterioration over the next three
years and repeated down-the-wire debt ceiling negotiations that threaten the
government's ability to pay its bills. Fitch has become a second rating agency
among “Big three” that lowered credit rating of the United States from the AAA
ceiling.
Standard & Poor’s
was the first to strip the top dating for the U.S. down to AA+, just a notch
away from the top AAA rating. This decision was made in 2011 after a previous debt
ceiling crisis. It has caused furious reaction in the market as the S&P 500
broad market index plunged by 17% leaving stocks under serious pressure before
October 2011. Bitcoin prices have jumped in a single day by 10%, and quickly
rolled back, and continue to fall along with the stock market. Bitcoin lost
around 34% in August 2011 extending its losses to 62% by October of the same
year. However, the infrastructure of investments in crypto assets has
dramatically changed since then. Many institutional investors came to the
crypto market, which has made crypto assets much less vulnerable to external
shocks. Some crypto enthusiasts consider some assets as a safe haven in case of
fiat monetary system destabilisation.
Meanwhile, the S&P
500 index reacted on Fitch’s decision with an immediate drop, while Bitcoin
prices rose by 3.0% to around $30,000 per coin. This reaction reminds of the algorithm
of 2011. If this algorithm would be translated into reality the S&P 500
index could drop dramatically, and Bitcoin prices too after a swift jump. The
nearest support level for Bitcoin prices is located at $23,000-25,000 per coin,
and the resistance is set at $34,000-36,000. The news about the Fitch rating
action came amid a moderate upside of Bitcoin prices.