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Bitcoin Emerges from Two-Week Trading Stagnation amid Moody’s Downgrade Impact on U.S. Banking Sector

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Bitcoin Emerges from Two-Week Trading Stagnation amid Moody's Downgrade Impact on U.S. Banking Sector

On Tuesday, cryptocurrencies experienced a collective increase in value, contrasting with the stock market’s performance. This shift coincided with the actions of ratings agency Moody’s, which placed the U.S. banking sector under scrutiny.

Bitcoin made a gain of approximately 2.5% and was recently valued at $29,785.88, as reported by Coin Metrics. Over the past 14 consecutive days leading up to Monday, the value of the primary cryptocurrency remained within a 1% range, indicating a lack of significant movement. It’s worth noting that the cryptocurrency market operates continuously around the clock.

The shifts in the market commenced in the early hours of Tuesday following Moody’s decision to lower the ratings of 10 U.S. banks. Additionally, prominent institutions like Bank of New York Mellon, U.S. Bancorp, State Street, and Northern Trust were placed on a watchlist for potential downgrades.

During the earlier part of the year, the turmoil within U.S. banks triggered a significant surge in Bitcoin’s value, as investors rekindled their interest in the network as an alternative financial system. The volatility in trading Bitcoin and Ether experienced a notable decline in May, following the subsiding of the banking crisis, and currently rests at multi-year lows, as reported by Kaiko.

The developments on Tuesday mirror this sentiment, as indicated by Greg Magadini, who serves as the Director of Derivatives at Amberdata. Magadini noted, “Bitcoin is displaying resilience. The connection between the stock market and bitcoin is unraveling, as bitcoin has demonstrated its ability to benefit from disruptions in the banking sector,” he conveyed to CNBC.

Amidst the decline in the primary stock market indices, stocks tied to the cryptocurrency sector experienced gains. Coinbase, a cryptocurrency exchange, saw a rise of 2.5%, while MicroStrategy, acting as a proxy for Bitcoin, registered an increase of 5.8%. Additionally, numerous mining-related stocks observed gains of 5% or greater.

Bitcoin’s upward movement had a ripple effect, boosting the entire cryptocurrency market. Ether also experienced a rise of 1.8%, while alternative cryptocurrencies associated with Ethereum, such as Solana and Polygon, saw gains of 5.8% and 4.9% respectively. In the decentralized finance (DeFi) sector, the Uniswap token recorded a gain of 4.8%. Additionally, the payments token XRP climbed by over 3%.

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