As Moody’s delivered the final blow to America’s pristine credit rating on May 16, 2025, Bitcoin enthusiasts couldn’t contain their smugness. The U.S. government, after more than a century of top-tier creditworthiness, finally lost its last AAA rating. Strike three – you’re out. First S&P in 2011, then Fitch in 2023, and now Moody’s has joined the downgrade party.
The reasons? Oh, just the usual suspects: skyrocketing government debt, ballooning interest payments, and politicians who can’t seem to stop spending money they don’t have. Interest payments are projected to consume thirty percent of revenue by 2035. Moody’s projects federal deficits to balloon from 6.4% of GDP in 2024 to a whopping 9% by 2035. Spoiler alert: That’s not good.
The market’s reaction was surprisingly chill, though. Treasury yields barely budged, and Wall Street basically yawned. After all, they’d seen this movie before with the S&P and Fitch downgrades. The dollar’s status as global reserve currency apparently dies hard. The 2011 S&P downgrade triggered global markets to plummet with major U.S. stock indexes dropping between five and seven percent in a single day.
But crypto bros? They were living for this moment. The Bitcoin crowd seized on the downgrade as their told-you-so moment, pushing a narrative about cryptocurrency being the ultimate safe haven from government fiscal mismanagement. The fixed supply cap of Bitcoin made it particularly attractive as a hedge against government debt concerns. Social media lit up with memes about Bitcoin’s superiority over traditional fiat currency, and the digital currency’s price got a nice little bump in the process.
The reality check? The U.S. economy still has some serious muscle. Moody’s grudgingly admitted America’s “exceptional credit strengths,” including its massive economic size and the dollar’s global dominance.
But those persistent budget deficits? They’re not going away anytime soon, especially with that 2017 tax cut extension threatening to add another $4 trillion to the deficit over the next decade.
Meanwhile, Congress keeps doing what it does best: arguing about the budget while the fiscal house burns. The downgrade might be a wake-up call, but if history’s any guide, Washington will probably just hit the snooze button. Again.
