As the potential US government shutdown has cast a shadow over global financial markets, the cryptocurrency sector has emerged as a beacon of stability, with Bitcoin and altcoins proving remarkably resilient in the face of external pressures. Despite the shutdown’s potential to disrupt traditional markets and erode investor confidence, the crypto market has remained steadfast, driven by growing demand and increased recognition.
Despite the chaos unfolding in the US, Bitcoin and altcoins have refused to stumble, instead continuing their upward trend, defying the gravitational pull of politics. As investors and analysts alike watch with bated breath, Bitcoin dominance is growing, which in turn is pushing altcoins up.
US Government Shutdown
The US government shutdown looms at midnight on Tuesday unless Republicans and Democrats reach a bipartisan agreement on a funding bill. Despite Republicans holding the majority in both congressional chambers, they’ll need Democratic support to pass a temporary funding bill, which Democrats are connecting to reversals of healthcare cuts implemented in July’s budget bill.
To avoid the shutdown, House and Senate leaders organized a meeting earlier today, after which the shutdown seemed imminent. Republican Senator JD Vance and Democrats failed to yield significant progress. The meeting aimed to extend government funding beyond Tuesday’s midnight deadline, but both sides blamed each other for the impasse. With a shutdown potentially disrupting various services as early as Wednesday, the clock is ticking. If Congress doesn’t reach an agreement, the consequences will be far-reaching, affecting multiple government agencies and services.
“I think we’re headed to a shutdown,” Vance said. Democrats and Republicans are at odds over extending the government funding deadline. While the former insists that any agreement must include preserving expiring health benefits, the latter argues that healthcare and government funding should be handled separately. Senate Democratic Leader Chuck Schumer posited that the two parties “have very large differences.”
How Will This Affect the Crypto Market?
With 79% odds on Polymarket, the crypto industry is expecting a government shutdown as early as October 1. Ahead of this upcoming development, analysts warn of potential threats to the crypto market.
AvaTrade chief market analyst Kate Lyman stated,
“A shutdown of the US federal government is not just political games in Washington. It creates uncertainty that spills over into global markets, and cryptocurrencies feel this shock too.”
“We will continue negotiations with the Democrats, but I believe the country may face a temporary cessation of government operations,” said President Trump. If the government shuts down, it will likely halt the publication of crucial economic data, including employment and inflation reports. This absence of key information will make it challenging for the Federal Reserve to gauge the economy’s performance and determine its next policy moves. This will indeed impact the crypto market negatively. Lyman said, “A combination of less information and slower oversight usually unnerves risk markets. Cryptocurrencies, already sensitive to market sentiment, may display even sharper swings.”
Bitcoin and Altcoins Stay Resilient
Despite these speculations, the crypto market stays steady ahead of the possible government shutdown. Bitcoin and altcoins show notable rebounds over the past 24 hours. In addition, historical trends also suggest a major uptrend for Bitcoin and other top coins in the month of October, which is often called “Uptober.”
Currently, the crypto market is up by a marginal 0.7%, reaching $3.88 trillion. While Bitcoin is trading above the critical $113k level, Ethereum has managed to hold its pivotal $4000 mark.
Analyst Niels shared an X post, shedding light on the upcoming crypto market rally. Niels believes that Bitcoin dominance is poised to rise further for a while, which could be a positive sign for altcoins. The analyst argues that the concurrent increase in Bitcoin dominance and price suggests the current market cycle has still room for growth.
