Following the budget crisis in the USA, the budget bill failed to receive approval and the US government officially shut down after 7 years.
At this point, due to the impact of the lockdown, many employees will be put on unpaid leave and the publication of key economic indicators such as employment and Gross Domestic Product (GDP) data will be suspended.
While some are wondering how this will affect Bitcoin (BTC) and the cryptocurrency market, historical data shows that government shutdowns do not have a direct negative impact on crypto markets.
Analysts also stated that the US government shutdown would have little impact on Bitcoin, with Bitcoin gaining 3.6% following the shutdown, while major altcoins such as Ethereum (ETH), XRP, Solana (SOL) and Dogecoin (DOGE) gained between 4% and 7%.
Speaking to CoinDesk, 21Shares analyst Matt Mena said the US lockdown accelerated BTC’s rise on hopes of increased liquidity.
Mena stated that the delay in the unemployment data scheduled to be released on Friday and the weak ADP employment data released during the shutdown will increase the likelihood of the Fed making further interest rate cuts, and this will support the rise in Bitcoin.
At this point, Mena said that Bitcoin will continue to rise if there is a 50 basis point reduction from the Fed by the end of the year and signals of easing quantitative tightening.
“The price surge experienced by BTC following the US Government shutdown could be a sign of an explosive rally to come.”
Crypto analytics platform SwissBlock also said that the government shutdown in the US will have little impact on the BTC price.
According to analysis by Swissblock, the US government shutdown will have minimal impact on the price of BTC. Analysts note that the longest US government shutdown in history, lasting 35 days from December 2018 to January 2019, occurred after Bitcoin had already lost 50% of its value and does not demonstrate a direct correlation. At this point, analysts note that Bitcoin was down approximately 6% during the shutdown, trading between $3,575 and $3,800.
Stating that there was no direct negative correlation between BTC and the shutdown, Swissblock described the 6% drop BTC experienced during the previous shutdown as insignificant.
*This is not investment advice.