The clock is ticking on whether Congress will pass federal spending legislation before the start of fiscal year 2024 on October 1. If lawmakers cannot renew funding by this critical deadline, which is more likely, a large number of governments will renew funding Operations would cease.
What impact, if any, will a government shutdown have on the price of Bitcoin (BTC-USD) for cryptocurrency investors? Seeking Alpha analyst Giesbers Investment Strategy has revealed Bitcoin’s price performance during the last three closures, which is widely seen as a gauge for the broader crypto market. Over the last year, from December 22, 2018 to January 25, 2019, the digital token fell by 9.8%. This followed a 15.7% decrease in the January 20-23, 2018 shutdown and a 7.8% increase in the October 1-16, 2013 shutdown.
Consider that there have only been three government shutdowns during Bitcoin’s existence, “so there’s not a lot of data here,” Giesbers noted last week.
The author argued that during these government shutdowns, other sources of volatility impacted Bitcoin (BTC-USD) more than the volatility caused by the shutdowns. And in 2013, Bitcoin (BTC-USD) was a fraction as popular as it is today, “and most importantly, people didn’t see it as a safe haven in the event of financial turmoil.”
In other words, BTC was a beast in itself, and “I believe that a government shutdown will not lead to a rise in the price of Bitcoin,” he predicted.
In the context of crypto securities regulation, one of the larger forces determining crypto prices, a shutdown would result in delayed regulatory decisions, including questions about crypto exchange-traded funds, as the Securities and Exchange Commission would face significant staff cuts . Financial heavyweights like BlackRock (BLK) and Fidelity Investments are vying to be the first to market a U.S. ETF that invests directly in Bitcoin (BTC-USD). Therefore, a delay in possible SEC approval for such a product could result in further uncertainty.
Some crypto investors have become bullish on the prospect of a government shutdown, with Bitcoin (BTC-USD) expected to close nearly 3% higher for the week ending September 30 on the assumption that non-sovereign currencies would be unaffected by the government proceedings . However, others have argued that a government shutdown could lead to an outflow of liquidity in financial markets as investors flock to safer assets, meaning Bitcoin could suffer unexpectedly, at least in the short term, as part of a broader sell-off.
“Crypto has always grown in an economic downturn. If you look at the creation of Bitcoin, its creation is a direct result of a major financial crisis caused by banks. “Every financial crisis serves to highlight Bitcoin’s strength as a decentralized asset that is not controlled by banks or governments,” said Stefan Rust, CEO of independent inflation data aggregator Truflation.
Meanwhile, traditional alternative assets such as gold (XAUUSD:CUR) as well as the stock market (SP500) are on track to end the week in the red, suggesting that “the market is viewing Bitcoin as a ‘flight to safety’ over time “We could be looking at a period of instability,” said David Waugh, senior analyst at Coinbits.
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Tevarak
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