- Bitcoin fell below $103,000 after record highs, reacting to economic uncertainty and yield shifts.
- Moody’s US credit downgrade pushed Bitcoin and gold up, signaling safe-haven demand rising fast.
Crypto markets started the week on a weaker footing after a record-breaking close last week. Last week’s closing high for Bitcoin came on its highest-ever daily and weekly candle close at $106,500, but by trading on Monday in Asia, its price drifted below $103,000. Ethereum took a similar route and shed almost 3.40% on the day and went below $2,400 after posting its earlier gains.
Key Events This Week:
1. Markets React to Moody's Downgrade – Monday
2. US Crude Oil Inventory data – Wednesday
3. S&P Global Manufacturing PMI data – Thursday
4. April Existing Home Sales data – Thursday
5. April New Home Sales data – Friday
6. Total of 14 Fed speaker…
— The Kobeissi Letter (@KobeissiLetter) May 18, 2025
While Bitcoin is still above its $100,000 level, its early week correction indicates that participants in markets are still reacting to new macroeconomic cues. Its decline comes as markets increasingly worry about the prospects for the US economy, despite a modest recovery in US Treasury yields.
“As the US Dollar weakens and uncertainty rises, Bitcoin and Gold are thriving,” said Kobeissi.
Last week, the wider financial markets showed a stark contrast. Stock markets recorded gains as crypto markets dipped lower as a consequence of a split in sentiments among investors. The lower-than-forecast consumer price index (CPI) figures and muted inflation expectations lent support to equities while crypto assets responded with more caution.
US Credit Rating Downgrade — Bitcoin, Gold Seen as Safer Bets
Friday saw Moody’s downgrade the credit rating of the US, an action that itself came as good news for assets commonly perceived as hedges in periods of financial uncertainty, including gold and Bitcoin. The downgrade is set to have an impact on Monday’s trade as participants on the markets respond to implications of increasing US fiscal risk.
The downgrade puts more pressure on the Federal Reserve, which has indicated in no uncertain terms that it is not loosening its stance.
“Trade deals, recession worries, lower inflation, and slowing GDP all can’t get lower yields,” noted the Kobeissi Letter.
Federal Reserve Chair Jerome Powell has been firm in his opposition to reducing interest rates despite building market excitement about policy action.
These changes point towards crypto markets potentially continuing to experience headwinds in the short term. Although Bitcoin retains solid gains on the longer time horizons, the nearer term is beginning to look more volatile based on contradictory signs from economic data and positioning on the part of central banks.
S&P Global PMI Preview
Investors look forward to Thursday’s publication of May’s preliminary S&P Global PMI figures. These statistics take a look at business and consumer activity in both services and manufacturing sectors that collectively power most of America’s economy. Other economic indicators tend to be behind periods after their release dates; however, PMIs are generally seen as more timely representatives of ongoing trends.
So far, the wider American economy is still stable, but President Trump’s tariffs in April may start showing their bite in this week’s figures. Although the official statistics so far continue to point to stability, so-called soft data, including Citigroup analysts‘ surveys, have indicated a decline in optimism, particularly among US businesses and consumers.
Home sales figures also come out during the period but do little to move crypto markets, which remain more sensitive to monetary policy and risk appetite as a global feature.
