Cryptos rebound after Fitch's unexpected downgrade of US credit rating

There´s been a remarkable rebound in the cryptocurrency market. Bitcoin (BTC) has risen more than 2% in the last 24 hours and is above $29,500, while Ethereum (ETH) has soared 1% and is approaching $1,860.

The rise of the reigning cryptocurrency coincides with Fitch Ratings' downgrade of the US long-term rating. The agency cut the rating from 'AAA' to 'AA+' arguing that "repeated political clashes over the debt limit and last-minute resolutions have eroded confidence in the fiscal management" of the country. It should be recalled that the agency put the U.S. rating under review last May, but it´s not until now that it has taken the decision to downgrade it.

The decision has surprised the markets, which are trading with significant losses on both sides of the globe, but they seem to be behaving somewhat better than in August 2011 when S&P downgraded U.S. debt. The good earnings season also seems to be helping on this front, as many large US companies are surprising investors with their figures.

Does this mean that the Fitch cut is behind this rise in cryptos? It's hard to say, as in 2011 Bitcoin was not as mature an asset as it is now and trading volume was barely a small fraction of what it is now. If we look at the data for those days, on August 6 it dropped 33% and on the 7th it rose 20%, although between the two days the volume amounted to just $200,000.

There are other factors that are also positively affecting the prices of the reigning cryptocurrency. One of them is MicroStrategy's intention to sell some $750 million in company shares to further shore up Saylor's strategy and continue to accumulate Bitcoin. The company's holdings amount to $4.4 billion in BTC.

"We intend to use the net proceeds from this offering for general corporate purposes, including the acquisition of Bitcoin and working capital, and, subject to market conditions," the company explained during the presentation that accompanied its second quarter results.

However, it is worth noting that Bitcoin's dominance has fallen slightly to the 50% border in the past month after climbing to yearly highs thanks to ETFs from BlackRock and other companies. On the one hand, the lack of news on this front has eroded investor optimism, while some experts point out that the ruling in the Ripple case before the Securities and Exchange Commission (SEC) has given extra support to altcoins, as they gained ground against Bitcoin.

In the days following the ruling, Coinbase, Kraken and other crypto exchanges re-listed or announced plans to reopen trading of XRP and trading of the token and other altcoins such as Solana (SOL) or Cardano (ADA) grew like wildfire. In contrast, Bitcoin began to fall to close the month with a 5% monthly decline, the second so far this year.

In other market news, cryptos are mixed. Dogecoin (DOGE) has dropped 0.1%, while ADA and SOL have risen slightly. Tron (TRX) has fallen 0.6%.