Threat of a Government Shutdown in the US is Looming: How Will It Affect Bitcoin Price If It Happens?

The threat of a U.S. federal government shutdown has fueled predictions of a Bitcoin rally reminiscent of the surge that occurred during the regional banking crisis earlier this year.

During the banking crisis in March, Bitcoin rose nearly 25% as three small and medium-sized US banks collapsed within five days. In fact, a significant portion of the stablecoin company Circle’s deposits were stuck in Silicon Valley Bank, and yet BTC was not badly affected.

The U.S. government shutdown could have far-reaching economic impacts. Federal contract holders, from Elon Musk’s SpaceX to local federal building cleaning service providers, are bracing for potential losses and revenue delays of $1.9 billion per day when funding is cut on Oct. 1.

James Butterfill, research manager at crypto asset manager CoinShares, also predicts that the government crisis in the US will support the Bitcoin price. Butterfill states that the closure could put pressure on the dollar and affect economic growth in the 4th quarter.

However, he also notes that media coverage and discussions regarding the impact of the government shutdown on Bitcoin prices have been relatively “tepid” compared to earlier this year.

From a regulatory perspective, Noelle Acheson, author of the “Crypto Is Macro Now” newsletter, expresses skepticism that a shutdown would significantly impact crypto markets or potential cryptocurrency legislation. He notes that current crypto bills could slow its progress, but they are expected to move slowly anyway.

*This is not investment advice.