Background: On May 16, Moody's downgraded the U.S. government debt rating from Aaa to Aa1, marking the first time since 1949 that the U.S. lost its highest credit rating. This move triggered a rise in U.S. Treasury yields, with the 10-year Treasury yield reaching 4.5% and the 30-year Treasury yield exceeding 5%.

Main Events: As a result, mainstream altcoins such as Ethereum (Ether), Solana, and Ripple (XRP) experienced a correction on May 19. Ethereum fell as much as 8% before rebounding but still ended the day down 4% compared to the previous day. Bitcoin's price was highly volatile, reaching a peak of $107,000 before retreating to $103,100. Market data showed that over $667 million in cryptocurrency positions were liquidated within 24 hours, with Ethereum long positions liquidated exceeding $205 million.

Analytical Views: Valentin Fournier, Chief Research Analyst at BRN, believes that the market may maintain a range-bound fluctuation before the Core PCE data release on May 30, with a low risk of a significant price drop. QCP Capital pointed out that Bitcoin's ability to rise amid declining risk appetite demonstrates signs of accumulation by institutional investors.

Potential Impact: In the short term, the cryptocurrency market may enter an accumulation phase, with future trends depending on new institutional demand or the emergence of macroeconomic catalysts. SoSoValue reminds investors to pay attention to market volatility and potential risks.

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.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.”

Moody's Downgrade of US Credit Rating Triggers Altcoin Correction, Market May Remain Volatile