Downgraded would mean that he is reduced in rank. Degraded also means to lower in rank, but now the word degraded when used with a person, more commonly means to ridicule or demean someone or something.
E.g. I used to speak French moderately well, but since I haven't had much practice, my skills have really degraded.
E.g. Just because you don't agree with my teaching skills doesn't mean you need to degrade me in front of my students.
E.g. Usually whenever a scandal hits in the military, several officers will be downgraded or even stripped of rank.