The United States government faced its first shutdown in six years on Wednesday, creating a political impasse that coincided with a rise in Bitcoin and gold as investors turned to safe-haven assets.
This is the first shutdown since the 35-day closure in December 2018, driven by profound partisan divisions that have prevented Congress from passing a crucial funding bill for the 2026 fiscal year.
The core issue revolves around a temporary funding measure, known as a continuing resolution. Republicans moved forward with the CR without including additional policy changes sought by Democratic Party leaders, led by Senator Chuck Schumer, who insisted on a permanent extension of Affordable Care Act tax credits to prevent millions from losing their healthcare coverage.
Bitcoin (BTC) rose 2.9% in the last 24 hours, trading at $116,427 at the time of writing, as per Cointelegraph data. Gold prices also climbed by 0.7%, indicating that there may be increasing demand for safe-haven assets amid the uncertainty surrounding the government shutdown’s duration.
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US government shutdown may signal altcoin bottom
Both Bitcoin and the S&P 500 might gain from the government shutdown, as it is expected to lead to lower US interest rates, according to Ryan Lee, chief analyst at Bitget.
“Bitcoin is likely to benefit from this shutdown, as its resilience to government and political uncertainties will make it appealing to mainstream traditional investors,” Lee told Cointelegraph. “While corrections are probable, many promising altcoins in the market seem to have reached their bottom.”
Bitcoin regaining the $116,000 mark is already a positive sign for the broader cryptocurrency market, which is entering the historically favorable month of October, potentially setting the tone for the remainder of the year, Lee stated.
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Global equity and digital asset markets have historically displayed mixed responses to government shutdowns.
During the 2013 government shutdown, stocks declined while Bitcoin surged, whereas the 2019 shutdown saw both equities and Bitcoin values drop, according to the macro investment resource Milk Road Macro.
“Shutdowns always disrupt government operations, but the market’s reactions vary,” it noted in a Tuesday X post.
After past government shutdowns, the US Federal Reserve has generally adopted a more dovish stance on interest rate policy, leading to an average annual increase of 13% for the S&P 500, according to the Kobeissi Letter, a trading resource.
“Historically, the market actually WELCOMES shutdowns,” it stated in a Wednesday X post.
On the prediction market platform Polymarket, traders estimate a 38% chance that the shutdown will conclude by Oct. 15.
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