The U.S. government shutdown doesn’t look like it’s going anywhere — but that doesn’t seem to be bothering Bitcoin all that much.
Even though the standoff between Republicans and Democrats is set to spill over into a second week, the world’s biggest cryptocurrency has rallied hard, up 12% over the past seven days. CoinMarketCap data shows BTC surged to $123,944.70 on Friday — just $500 away from a new record high.
So: what are the main factors behind Bitcoin’s breakout… and will we see a pullback if the political drama continues? Cryptonews has spoken to four experts for their perspective.
There’s one thing that our panel agreed on: Bitcoin’s bullish momentum is linked to something known as “the debasement trade.” Bitwise’s senior investment strategist, Juan Leon, told us:
“The government shutdown is a symptom of the systemic risk stemming from political tensions. This is driving investment flows into safe-haven assets such as Bitcoin that are independent of government influence. Events like these shake investor confidence in the US dollar.”
James Gernetkze is chief financial officer at the wallet provider Exodus. Speaking to Cryptonews, he explained that the markets don’t believe the shutdown will have a long-term economic impact. As a result, many traders believe the Federal Reserve will continue to cut interest rates — a bullish development for the tech sector and BTC.
“For Bitcoin specifically, October has been a strong month historically — but seasonality may be more of a coincidence than a cause right now. Traditional Bitcoin cycles have run into a number of atypical macro factors like US regulation. In addition, early Bitcoin holder movements (profit taking) feel like they have slowed, lowering sell pressure.”
Two Prime CEO Alexander Blume added that crypto’s rally is being driven by loosening monetary policy, along with strong economic numbers.
“There’s pretty much no other way to foresee the future other than more money printing, a net benefit for BTC.”
Illustrating how the “debasement trade” has worked in practice, Bitwise’s Juan Leon noted that Bitcoin ETFs have witnessed inflows of more than $2.3 billion since September 29.
Two Prime’s Alexander Blume says BTC and gold — which has also touched record highs — are now looking attractive to investors for one key reason.
“Belief in the US dollar’s stability and long-term value continues to diminish as a result of excess spending, geopolitical instability, and persistent inflation.”
The precious metal has recently witnessed an uptick in demand from nation-states and institutions, with Blume arguing that BTC historically tends to rally a few months later.
“This current move in BTC is right in line with this timing. Within the Bitcoin ecosystem, many investors know that Q4 is typically the best-returning quarter for the asset. This expectation alone can drive speculation and move the price up.”
Of course, the big question on everyone’s lips now is whether “Uptober” will continue uninterrupted, or Bitcoin could experience a correction if the federal government remains closed. The longest shutdown in history took place during Donald Trump’s first term, and lasted for 35 days. Juan Leon admits this is a possibility, adding:
“If the shutdown drags on long enough and the repercussions become severe enough to create a sustained risk-off sentiment in markets, BTC could be negatively impacted.”
Hashdex’s chief investment officer, Samir Kerbage, agreed with this — but said there’s another factor to keep an eye on: whether Bitcoin’s return to near all-time highs makes it vulnerable to profit taking.
Exodus’ James Gernetzke had a different take, telling Cryptonews:
“There is always a risk of a pullback, but it is unlikely to be due to a government shutdown, in my opinion. Uncertainty around the government would tend to cause pressure on the US dollar, which would result in flight to safe havens like gold and Bitcoin.”
For now, it isn’t just BTC that’s rallying hard. Ether’s also jumped by 12% over the past week, with BNB surging 22% and Solana up 14%. Speculation that altcoin ETFs could soon be approved by the Securities and Exchange Commission will undoubtedly be playing a factor here.
Data from Coinglass shows that Bitcoin locks in gains of 20.74% over the course of an average October — with just two months in the red since 2013. Just four days into this brand-new month, BTC has already risen by 7%. There’s quiet confidence this digital asset has further room to run.
The post Experts Reveal Why Bitcoin’s Rising Despite Shutdown — and If It Will Pull Back appeared first on Cryptonews.
