Bitcoin's 'hard money' status reinforced by US credit rating downgrade

Quick Take

  • Recent macroeconomic dynamics are putting bitcoin’s hard money quality back in focus, according to an analyst. 

A recent U.S. credit rating downgrade is drawing investor attention to bitcoin's quality as a hard money alternative to a depreciating dollar, an analyst said.

Ratings agency Fitch on Tuesday downgraded its long-term ratings on the U.S., citing an expected fiscal deterioration over the next three years and the "high and growing" general government debt burden.

"We saw crypto move higher after Fitch downgraded the U.S. credit rating from AAA to AA+," Gordon Grant, head of sales and trading at Genesis, told The Block, adding that recent macroeconomic dynamics are putting bitcoin's hard money quality back in focus.

"With increased U.S. Treasury borrowing, interest costs higher, and funding needs rising, the need for a hard money alternative starts to be appreciated," he said.

The world's largest digital asset by market capitalization rose almost 1% to $29,281 at 1:00 p.m. on Thursday, ET according to CoinGecko.

Larry Fink's move to bitcoin

Grant highlighted the significance of Larry Fink's statement in July in relation to ongoing macroeconomic factors and bitcoin.

"The fact that Larry Fink is saying this, coupled with the credit worthiness of the U.S. sovereign now in open debate, a narrative is forming that implicates a certain price trajectory for bitcoin. This is something we are discussing actively with our client base," the head of trading at Genesis added.

Several major institutions, among them BlackRock, Fidelity, WisdomTree and Valkyrie, have in recent months filed applications for a spot bitcoin ETF with the SEC, a move Grant sees as a positive sign.

"People recognize BlackRock has an almost 100% ETF success record, this tells us something. Larry Fink's conviction about a spot bitcoin ETF has also given people confidence, this is not just a shot in the dark," he added.

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