In a dramatic weekend, Bitcoin soared above $107,000 only to plummet to around $103,200 in European trading hours. This swing, amounting to a $4,000 drop, occurred within just twelve hours. The cryptocurrency hit an intraday peak of $107,111 during the early Asian market hours before liquidity dried up, causing major exchanges like Binance and Coinbase to fall to $102,000.

Understanding Bitcoin’s Turbulent Weekend

This astonishing volatility can be traced back to a critical decision by Moody’s, which announced a downgrade of the United States’ sovereign credit rating to Aa1 late Friday. This move stripped the country of its last remaining AAA rating, a position it had held since S&P’s downgrade in 2011 and Fitch’s more recent downgrade in 2023. Moody’s pointed to “an uninterrupted rise in debt and interest costs” as a significant factor driving this downgrade. Additionally, US 30-year Treasury yields surpassed 5% for the first time in several months, contributing to a risk-off sentiment that permeated equities and high-risk assets.

In response to the ratings change, Treasury Secretary Scott Bessent downplayed the rating’s implications in a Sunday interview: “Moody’s is a lagging indicator. This didn’t happen overnight. We’re determined to reduce spending and stimulate economic growth.”

The primary trigger behind this market pull-back seems to be macroeconomic factors rather than any specific news within the cryptocurrency space. That said, reaction from derivatives markets intensified the price swings. Data from Coinglass indicated that over $665 million in leveraged positions were liquidated across the cryptocurrency markets, as perpetual funding rates flipped dramatically amid the quick price spikes.

Traders aiming for long positions “took the chance to secure profits,” noted Singapore-based QCP Capital in their Monday report. They attributed part of the weekend price surge to “Metaplanet’s $104 million BTC acquisition, alongside regular accumulations by Strategy Inc.” They also asserted that Bitcoin’s ability to increase in value while traditional equities declined “strengthens BTC’s reputation as a viable store of value.”

Recent inflows into the ten available spot Bitcoin exchange-traded funds (ETFs) corroborate this narrative. As of April 29— the latest comprehensive data—these ETFs had garnered about $38.99 billion in net subscriptions, holding roughly 1.14 million BTC after a notable inflow of $591 million, according to Farside Investors data.

Technical analysts find themselves divided over the next steps for Bitcoin. Adam Khoo, founder of Piranha Profits, reminded his 450,000 followers that previous downgrades in US ratings led to significant corrections in the S&P 500, often followed by a full recovery within the year. He questioned whether the market might “repeat past mistakes or approach this situation more wisely.”

For Bitcoin specifically, the situation presents a more nuanced picture. On-chain data reveals that exchange balances are at multi-year lows, while options markets highlight a continuing call-side skew—suggesting a “structurally bullish” sentiment despite recent volatility, according to QCP. Traders are closely monitoring the $101,000 to $100,000 range as initial support; a breach could expose the 50-day exponential moving average around $98,400. Conversely, reclaiming $107,000 might set the stage for retesting January’s all-time high of $109,114.

In the meantime, Bitcoin appears to be in a waiting phase, processing the Moody’s downgrade while allowing broader economic traders—not just crypto enthusiasts—to dictate the pace of forthcoming movements.

As it stands, BTC is trading at approximately $102,605.