Altcoins retreat amid macro volatility following US credit rating cut, analyst says

Altcoins bled on Monday as market leaders like Ether, Solana, and XRP reversed last week’s uptrend following a fresh wave of macroeconomic jitters in the United States.

On May 16, Moody’s, a New York-based credit rating agency, downgraded U.S. government debt from Aaa to Aa1 due to rising fiscal concerns. The one-notch downgrade marks new territory for the U.S., which had maintained the highest credit rating ceiling since 1949. U.S. Treasury markets responded to the update, with the 10-year Treasury yield climbing to 4.5% and the 30-year note yield crossing 5%.

Valentin Fournier, lead research analyst at BRN, also noted that altcoins and Bitcoin showed mixed trading over the weekend following the news.

Ether slipped to $2,380, an 8% decline at one point. ETH had since recovered to $2,400 but still traded down 4% in the last 24 hours, according to The Block’s price page. SOL, XRP, and ADA also posted losses on the day, with the GMCI 30 Index down by 3%.

Bitcoin showed a slight change on May 19 after the brief run to a new local high on Sunday and a subsequent correction. BTC reached $107,000, not far from its $108,786 all-time high, then retraced to $103,100 as of writing. QCP Capital attributed the price leap to institutional accumulation from Metaplanet and likely Strategy as well.

“What’s particularly striking is BTC’s ability to rally over the weekend despite a risk-off tone in equities following the Moody’s U.S. credit rating cut,” QCP wrote in a Monday Telegram update.

Liquidations

Today’s liquidation data suggested that BTC bulls and bears were unprepared for Sunday’s price action. According to Coinglass, the rally closed over $173 million in leveraged BTC positions, nearly evenly split between long and short trades. Over $82 million in long bets were wiped out, while BTC shorts lost more than $91 million. The liquidation data are based on publicly available data, which may understate the true extent of market liquidations.

Ether’s activity showed a clearer downside for long trades. North of $205 million in positions that hoped for higher prices were closed, compared to over $58 million in short-based trades. Overall, crypto market liquidations crossed $667 million from 154,736 traders in the past 24 hours.

After Moody’s rating change and recent liquidation, BRN’s Fournier said crypto could trade sideways till catalysts emerge. However, the analyst also noted a low chance for aggressive price dips.

“With few macro catalysts before the May 30th core PCE data, we expect range-bound trading and an accumulation phase,” Fournier wrote in an email. “Downside risk appears limited in the near term, but breakout potential hinges on fresh institutional demand or a macro catalyst.”