Welcome to another edition of The Bitcoin Weekly!
Every week, we break down the four most important events shaping Bitcoin, from protocol updates to the macroeconomic and geopolitical forces driving the market. We explain what happened, why it matters, and how it impacts your stack. Plus, we always include one educational concept to help you level up your Bitcoin knowledge.
Let’s dive into this week’s top stories.
1. Moody’s Downgrades U.S. Credit Rating
In a historic move on May 16, Moody’s Ratings downgraded the United States’ long-term credit rating from Aaa to Aa1. This marks the first time Moody’s has stripped America of its pristine credit status since it began rating U.S. debt in 1917. The agency cited the rapid expansion of national debt and increasing interest payment burdens. The U.S. national debt officially crossed the $39 trillion milestone this week.
This is the exact macroeconomic scenario Bitcoin was designed for. The downgrade of the world’s reserve currency issuer highlights the unsustainable trajectory of fiat debt.
2. The “One Big Beautiful Bill” Adds Trillions to the Debt
Compounding the Moody’s downgrade, the market is digesting the fiscal impact of the newly passed “One Big Beautiful Bill Act” (OBBBA). The reconciliation package, which extended the 2017 tax cuts while adding new deductions, is projected to add between $3.4 trillion and $5.7 trillion to the U.S. federal debt over the next decade.
The bond market’s reaction to this massive debt expansion has been relatively muted so far, but the long-term implications for Bitcoin are profound. If the U.S. government continues to run massive deficits, it will eventually be forced to monetize that debt (print more money) to service it. This debasement of the dollar is the primary driver of institutional Bitcoin allocation. The OBBBA guarantees that the fiat money printer will have to run hotter in the years ahead.
3. MicroStrategy Flags Potential Bitcoin Sales for Debt Buyback
MicroStrategy (now rebranded as Strategy) filed an 8-K revealing plans to repurchase roughly $1.5 billion of its 2029 convertible notes for an estimated $1.38 billion in cash. Crucially, the filing explicitly listed Bitcoin sales as a possible funding mechanism for the repurchase. A full BTC-funded buyback would require selling roughly 17,448 BTC (about 2.1% of its massive stash).
This news introduced a new risk vector to the market. For years, MicroStrategy has been viewed as a pure “diamond hands” accumulator. The mere suggestion that they might sell Bitcoin to manage their liabilities caused a slight market spook, contributing to Bitcoin’s dip below $77,000 earlier in the week. However, it also shows the maturation of corporate Bitcoin treasuries, using BTC as a highly liquid balance sheet asset to actively manage corporate debt, rather than just hoarding it blindly.
4. Bitcoin Flushes the Leverage
Amid the macro turbulence of the credit downgrade and the MicroStrategy news, Bitcoin experienced a significant sell-off between May 18 and 19, dropping to a three-week low near $76,500. This drop triggered over $600 million in liquidations across the broader crypto market, flushing out over-leveraged long positions. By May 22, Bitcoin had stabilized and begun consolidating back above $77,400.
While price drops are never fun, leverage flushes are a healthy and necessary part of Bitcoin bull markets. When too many traders borrow money to bet on the price going up, the market becomes fragile. A quick drop wipes out those leveraged positions, resetting funding rates and creating a healthier, more stable foundation for the next leg up.
Bitcoin Concept of the Week: Fiat Debasement
With the U.S. credit downgrade and the national debt hitting $39 trillion, you’ll hear the term “Fiat Debasement” a lot. What does it mean?
“Fiat” is government-issued money (like the US Dollar, Euro, or Yen) that isn’t backed by a physical commodity like gold. “Debasement” means lowering the value of that money.
When a government spends trillions more than it collects in taxes, it has to borrow the difference. Eventually, the debt gets so large that the government has to create (print) new money to pay it off. When you increase the supply of dollars, each individual dollar becomes worth less. It buys fewer groceries, less gas, and less real estate.
Bitcoin fixes this. It has a hard-capped supply of exactly 21 million coins. No government, central bank, or CEO can ever print more Bitcoin to pay off their debts. When you hold Bitcoin, you are holding an asset that cannot be debased by political decisions. As the supply of fiat money goes to infinity, the value of a strictly scarce asset like Bitcoin naturally rises against it.
Thanks for reading! If you enjoyed this week’s breakdown, share it with a friend who needs to get off zero.
Stay humble, stack sats.
Stephan