US government shutdown may signal crypto market bottom: Analysts

The United States government entered its first shutdown in six years on Wednesday, a political standoff that coincided with a rise in Bitcoin and gold as investors sought safe-haven assets.

The US government is experiencing its first since the 35-day closure in December 2018, stemming from deep partisan divisions that have made Congress unable to pass a key funding bill needed for the 2026 fiscal year.

The main dispute stems from a temporary funding measure, known as a continuing resolution. The Republicans advanced the CR without additional policy changes requested by Democratic Party members, led by Senator Chuck Schumer, who demanded a permanent extension of Affordable Care Act tax credits, which they said would prevent millions from losing healthcare coverage.

Bitcoin () rose 2.9% in the past 24 hours and traded at $116,427 at the time of writing, according to Cointelegraph data. Gold prices also rose 0.7%, signaling that large investor demand for safe-haven assets may be increasing due to the uncertainty surrounding the duration of the government shutdown.

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Both Bitcoin and the S&P 500 may benefit from the government shutdown, as it is likely to result in a period marked by lower US interest rates, according to Ryan Lee, chief analyst at cryptocurrency exchange Bitget.

“Bitcoin is bound to also benefit from this shutdown, as its immunity to government and political uncertainties will make it attractive to mainstream traditional investors,” Lee told Cointelegraph. “While corrections are likely along the way, most promising altcoins in the market appear to have bottomed out.” 

Bitcoin reclaiming the $116,000 level is already a positive sign for the wider cryptocurrency market, which is heading into the “historically positive month of October,” and may set the tone for the rest of the year, Lee said.

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Global equity and digital asset markets have previously shown mixed reactions to government shutdowns.

During the 2013 government shutdown, stocks fell and Bitcoin rallied, while the 2019 shutdown saw both equities and Bitcoin valuations falling, according to macro investment resource Milk Road Macro.

“Shutdowns always disrupt the flow of government, but the market’s reaction is never uniform,” it wrote in a Tuesday X .

Following previous government shutdowns, the US Federal Reserve has become more dovish in its approach to interest rate policy, resulting in an average yearly rise of 13% for the S&P 500, according to the Kobeissi Letter, a trading resource.

“Historically, the market actually WELCOMES shutdowns,” it wrote in a Wednesday X .

On prediction market platform Polymarket, traders see a 38% the shutdown will end by Oct. 15.

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