The US government faced its first shutdown in six years on Wednesday, creating a political deadlock that coincided with Bitcoin and gold surging as investors sought safe-haven assets.
This marks the first shutdown since the 35-day closure in December 2018, caused by deep partisan divisions that prevented Congress from passing a crucial funding bill for the 2026 fiscal year.
The primary contention revolves around a temporary funding measure known as a continuing resolution. Republicans moved the CR forward without the additional policy changes sought by Democratic members, led by Senator Chuck Schumer, who called for a permanent extension of Affordable Care Act tax credits, arguing that it would safeguard millions from losing their healthcare coverage.
Bitcoin (BTC) saw a 2.9% increase in the past 24 hours, trading at $116,427 as reported by Cointelegraph. Gold prices also climbed by 0.7%, indicating a growing demand for safe-haven assets amid uncertainties associated with the government shutdown.
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US government shutdown may signal altcoin bottom
Both Bitcoin and the S&P 500 might gain from the government shutdown, which is likely to lead to a phase of reduced US interest rates, according to Ryan Lee, chief analyst at cryptocurrency exchange Bitget.
“Bitcoin is set to benefit from this shutdown, as its resilience to government and political uncertainties will appeal to mainstream traditional investors,” Lee stated to Cointelegraph. “While adjustments are expected, most promising altcoins in the market appear to have reached their lows.”
Bitcoin’s return to the $116,000 level is already a positive indicator for the broader cryptocurrency market, which is entering the “historically favorable month of October,” potentially setting the trajectory for the remainder of the year, according to Lee.
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Global equity markets and digital assets have historically reacted variably to government shutdowns.
During the 2013 shutdown, stocks declined while Bitcoin surged; conversely, both equities and Bitcoin experienced drops during the 2019 shutdown, as noted by macro investment resource Milk Road Macro.
“Shutdowns always disrupt government operations, but market reactions are rarely uniform,” the post stated on Tuesday X post.
After previous shutdowns, the US Federal Reserve typically 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 noted 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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