Moody’s downgraded the US credit rating outlook from ‘stable’ to ‘negative’ on Friday, which may halt the bullish momentum of the wider crypto market – including ETF approvals.
This week is a significant one in the world of spot Bitcoin ETFs. The period between November 9 and November 17 marks the first window in which the US Securities and Exchange Commission (SEC) can decide to approve or reject the list of Bitcoin ETF applications on its docket.
Key analysts have forecasted imminent approval, sending the Bitcoin market strongly upward.
There is however one looming factor that threatens to unravel Bitcoin’s bullish momentum: the prospect of a US government shutdown.
Moody’s downgrades the US credit rating outlook to “negative”
On Friday, Moody’s downgraded the US credit rating outlook from “stable” to “negative”.
A statement from Moody’s affirmed, ”In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the US’ fiscal deficits will remain very large, significantly weakening debt affordability.”
The US currently has debt of around $33.70 trillion. The outlook downgrade means that the US is increasingly in danger of defaulting on its debts, which would lead to a US government shutdown.
A shutdown have catastrophic consequences on the global economy, which depends upon the stability of the US dollar.
Christopher Hodge, Chief Economist for the US, commented that it’s “hard to disagree” with the rationale behind the downgrade, and that there is no “reasonable expectation for fiscal consolidation any time soon.”
“Deficits will remain large (even if not expanding) and as interest costs take up a larger share of the budget, the debt burden will continue to grow,” he added.
However, if ETF approval does come, it’s likely that the SEC will approve all applicants at once, rather than just BlackRock’s.
Nate Geraci, President of the ETF Store and host of the ETF Prime podcast, explained that mass-approval will help the SEC “avoid being perceived as playing kingmaker in an extremely high stakes and absurdly competitive market.”
Geraci added, “another factor to consider here is potential government shutdown later this week…”
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