- US CDS nearing 2023 crisis levels, reflecting fiscal concerns.
- Investors wary of U.S. government’s rising deficit.
- Increased volatility expected in financial markets amid uncertainty.
This increase in U.S. CDS levels highlights intensifying worries over fiscal stability and possible impacts on global financial markets.
The cost of insuring U.S. government debt against default has risen sharply, with the 1-year credit default swap (CDS) reaching its highest point since the 2023 debt ceiling crisis.
US CDS Rates Climb to Post-2023 Crisis Highs
The cost of insuring U.S. government debt against default has risen sharply, with the 1-year credit default swap (CDS) reaching its highest point since the 2023 debt ceiling crisis.
Despite the Federal Reserve’s decision to maintain its current interest rate, markets remain jittery. The rising CDS rates suggest that investors remain cautious, leading to broader market volatility. During past debt crises, similar uncertainty has often driven investments into cryptocurrencies and non-sovereign assets. Without new statements from key figures such as Jerome Powell or Treasury officials, the market has relied on CDS movements as a signal of potential fiscal distress.
“We’re in the right place to wait and see how things evolve. We don’t feel like we need to be in a hurry. We feel like it’s appropriate to be patient.” — Jerome Powell, Chair, Federal Reserve
Cryptocurrencies Gain As CDS Levels Trigger Market Volatility
Did you know? The unpaid notional amount of CDS has surged by $1 billion in 2025, reaching $3.9 billion, the highest since 2014.
Bitcoin (BTC), reflecting the broader market’s sensitivity to U.S. fiscal concerns, has seen a recent 0.35% price increase to $104,178.84. With a market cap of $2.07 trillion, Bitcoin continues to dominate at 63.60% of the crypto market. However, trading volumes have seen a decline of over 34.60%, highlighting waning trading interest amidst broad macroeconomic uncertainty. According to CoinMarketCap, despite these fluctuations, Bitcoin’s price has experienced growth of 7.50% over 30 days.
Insights from Coincu suggest that without resolution of the U.S. debt ceiling issues, global markets could witness further fluctuations, especially in cryptocurrencies like Bitcoin. As fiscal solvency concerns persist, the financial sector remains alert to potential regulatory shifts and economic shifts, which could fuel further interest in digital assets as a financial hedge.
Source: https://coincu.com/340940-us-cds-levels-increase-2025/