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Bitcoin has surged past the $117,000 mark as altcoins gain traction, yet a sense of caution prevails among traders. The current rally feels tenuous, with attention diverted from market charts to the stagnant Capitol Hill, where political turmoil may overshadow technical gains.
Summary
- Bitcoin has risen above $117K, boosted by a 4% market rally that benefits altcoins such as Solana, XRP, and Dogecoin.
- The upward trend coincides with a U.S. government shutdown, leading to increased market volatility and nervousness among investors.
- Analysts caution that the fiscal impasse might raise short-term risks, although the long-term impact on the market could be minimal.
The U.S. government initiated a shutdown early Wednesday due to a gridlocked Congress, unable to resolve a partisan battle over healthcare subsidies before the midnight deadline.
During the initial hours of this fiscal impasse, Bitcoin rebounded from its support level of $109,000, climbing over 3.5% to exceed $117,000, as reported on the crypto.news price page. This recovery contributed to a broader 4% increase in the crypto market, elevating its total valuation to $4 trillion.
Smaller cryptocurrencies like Solana (SOL), XRP, and Dogecoin (DOGE) took advantage of this momentum, surging more than 5% and leading a spirited altcoin rally that seems to overshadow the political deadlock.
Analysts caution against volatility as shutdown aligns with Powell’s dovish stance
Market analysts are split on the potential impact of the U.S. government shutdown on crypto, but they unanimously agree it complicates an already unstable situation. The clash between Washington’s financial impasse and dovish signals from Fed Chair Jerome Powell creates a dynamic that investors cannot afford to overlook.
A representative from Bitunix stated that the political stalemate is introducing new volatility to an environment already adjusting to changes in monetary policy. The analyst noted that a prolonged shutdown could delay essential economic data, hinder consumer and investment activities, and raise alarms over a slowdown in growth.
Ironically, this very weakness could bolster the case for the monetary easing that initially sparked the crypto rally. For assets like Bitcoin and the overall crypto market, this means navigating between two contrasting narratives: one anticipating easy monetary policies and another triggered by economic concerns leading to a search for safety.
“The government shutdown poses a short-term political risk, not altering the medium-term easing trend but amplifying market volatility. The current situation is caught between expectations of rate cuts and concerns over growth, keeping investor sentiment on edge. For BTC, monitor support levels at 110k–112k and 106k–108k, with resistance at 116k and 122k–125k. Flexibility is vital, and traders should keep an eye on liquidation zones,” the analyst remarked.
Analysts advocate for a calm approach
The sentiments of measured calm expressed by the Bitunix analyst are mirrored within the institutional realm. Johnny Garcia, managing director of Institutional Growth and Capital Markets at VeChain, offers a long-term viewpoint in a note, asserting that government shutdowns are not unprecedented and historically leave little lasting imprint on markets.
While the current stakes may inspire a sense of ‘this time is different,’ Garcia highlighted, “typically a resolution is eventually reached.” He expressed confidence that the shutdown itself is “likely more background noise than significant for long-term market effects,” a perception supported by the relatively muted response in traditional equity and bond markets at the onset.
Moreover, this is not an unfamiliar situation for the United States. This marks the eleventh federal government shutdown in the last four decades, a recurring saga of partisan strife. The longest stoppage, which lasted 35 days in late 2018, serves as a stark reminder of how prolonged these conflicts can become.
