The government of the United States experienced its first shutdown in six years on Wednesday, a political deadlock that aligned with a surge in Bitcoin and gold as investors looked for safe-haven assets.
The US government is facing its first shutdown since the 35-day halt in December 2018, resulting from intense partisan disagreements that have left Congress unable to approve a crucial funding bill required for the 2026 fiscal year.
The primary contention arises from a temporary funding proposal, referred to as a continuing resolution. The Republicans moved forward with the CR without the additional policy changes requested by Democratic party leaders, particularly Senator Chuck Schumer, who insisted on a permanent extension of Affordable Care Act tax credits to prevent millions from losing healthcare coverage.
Bitcoin (BTC) increased by 2.9% over the last 24 hours, trading at $116,427 during this report, based on Cointelegraph data. Gold prices also rose by 0.7%, indicating that major investor interest in safe-haven assets may be growing due to uncertainty regarding the length of the government shutdown.
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The US government shutdown may indicate an altcoin bottom
Both Bitcoin and the S&P 500 could benefit from the government shutdown, as it is expected to lead to a period of lower US interest rates, according to Ryan Lee, chief analyst at cryptocurrency exchange Bitget.
“Bitcoin is likely to gain from this shutdown, as its resistance to government and political uncertainties will make it appealing to conventional investors,” Lee informed Cointelegraph. “While corrections may occur along the way, the most promising altcoins in the market seem to have reached their lows.”
Bitcoin’s recovery of the $116,000 threshold is already a positive development for the broader cryptocurrency market, which is entering the “historically positive month of October,” potentially influencing the remainder of the year, Lee stated.
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Global equity and digital asset markets have historically shown 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 macro investment source Milk Road Macro.
“Shutdowns always interrupt government operations, but the market’s reaction is never consistent,” it explained in a Tuesday X post.
In the aftermath of past government shutdowns, the US Federal Reserve has typically adopted a more dovish stance on interest rate policies, leading to an average annual increase of 13% for the S&P 500, based on the Kobeissi Letter, a trading resource.
“Historically, the market genuinely WELCOMES shutdowns,” it stated in a Wednesday X post.
On the prediction market platform Polymarket, traders currently estimate a 38% likelihood that the shutdown will conclude by Oct. 15.
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