Moody’s Investors Service has downgraded the U.S. credit score, leading to notable market volatility, with Ethereum (ETH), Dogecoin (DOGE), and XRP experiencing a 3% decline each, according to Coindesk.
The downgrade has increased volatility in cryptocurrency markets, highlighting potential shifts in retail-driven trading activities and risk appetites globally, particularly seen in Korean exchanges.
U.S. Credit Downgrade Triggers Crypto Market Volatility
Moody’s Investors Service recently downgraded the U.S. credit rating, causing ripple effects across various financial sectors. Cryptocurrencies, known for their volatility, experienced noticeable fluctuations following this change, with specific impact observed in ETH, DOGE, and XRP prices.
The involved parties include Moody’s, cryptocurrency networks like Ethereum, Dogecoin, and XRP, and exchanges such as Upbit in South Korea. This event demonstrated the interconnectedness of global financial decisions and the cryptocurrency market.
ETH, DOGE, XRP Prices Drop by 3% Post-Downgrade
The immediate effect on ETH, DOGE, and XRP was a 3% price drop. Retail investors, primarily from Korea, increased trading volumes significantly, suggesting a strong speculative interest despite wider market concerns.
The downgrade has spurred speculation about potential regulatory impacts and technological responses. Analysts have noted shifts towards altcoins, as historical data suggest major events often catalyze market volatility and investor reallocation. Augustine Fan, Head of Insights, SignalPlus, commented: “Risk assets have rebounded significantly to levels that are now challenging even the most committed skeptics. I believe the trade remains be higher until more macro bears concede.”
Altcoins React Sharply in Historical Credit Downgrades
In previous downgrades, cryptocurrencies have shown increased volatility, with altcoins like DOGE and XRP reacting more fiercely than Bitcoin. These events offer insights into market behavior during macroeconomic stress.
Experts, including those from SignalPlus, highlight the resilience and adaptability of risk assets. Historical trends suggest potential rallies once broader market fears dissipate, with undervalued altcoins potentially spearheading recovery.
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