This was the big news last week; America’s credit rating has been downgraded by Fitch, but it’s minor, according to billionaire investor Samad Palihapitiya. The US moved to “AA+” from “AAA” (higher rating) last week, otherwise the outlook is stable.
According to Balihabitiya, there is nothing we can do about it because America is still the most dominant economy in the world.
America continues to dominate the economy
According to Palihapitiya, it sounds very pompous, the downgraded credit rating of the United States, but in fact, according to him, it does not mean anything.
“We are the most important economic power in the world. We will remain so, and I see that every country has a harder time than the United States in monetary terms,” the billionaire said.
Central banks around the world will struggle to find an alternative to the US dollar, Palihapitiya said.
“What would you do if you were a federal government that needed to hold foreign currency? Are you suddenly choosing the Euro? Or for the yuan, which is practically an extension of the US dollar…?” He asks many rhetorical questions.
What does this mean for Bitcoin?
For Bitcoin, this is practically nothing. If these developments continue at current rates and the United States’ debt levels are reduced by several parties, this could push interest rates higher.
Some funds are only allowed to invest from a certain credit level; In most cases that range is at “AA+,” where the US is still engaged for Fitch and the rest at “AAA.”
That way, the appetite for US Treasuries will not change. In that case, it wouldn’t cause a flight out of the US dollar, which would drag Bitcoin to a new all-time high.
Although characteristic of America’s current financial situation, they receive a low credit rating.
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