Bitcoin Faces Volatility Risks as US Government Shutdown Looms

A shutdown, or budget freeze, is looming in the US starting tomorrow. Analysts expect this to have an impact on Bitcoin as well. This is how BTC could continue to suffer in the event of a US shutdown.

Bitcoin appears to be stabilizing at around $114,000

But in Washington, President Donald Trump’s Republicans and the opposition Democrats have so far failed to reach an agreement in the budget dispute, with the deadline expiring at midnight. Then a so-called “shutdown” would begin, a budget freeze. The White House is already preparing for this eventuality. What awaits Bitcoin if hundreds of thousands of civil servants in the US are forced to go on furlough starting tomorrow and many public services are shut down?

Because the administration would massively scale back its work during a shutdown, the release of data on the US labor market, scheduled for Friday, could be canceled. This, in turn, is a sensitive issue for the Fed, as the labor market and inflation are key indicators for decisions on the key interest rate. Bitcoin had hoped for a further Fed interest rate cut by the end of October – but this could be delayed as a result of a shutdown.

– When budget deliberations dominate US domestic politics, other legislative proposals are put on hold. The crypto industry wants the Clarity bill, which also touches on Bitcoin in the decentralized finance (DeFi) sector, to be finally passed.

Historically, Bitcoin has survived two shutdowns. Experts recall that in October 2013, BTC gained 14 percent during a 13-day shutdown. But when a government shutdown lasted 35 days at the turn of the year 2018/2019, Bitcoin lost 6 percent during that period. However, these situations are hardly comparable to 2025, when Bitcoin will have entered the mainstream.

Analysts conclude that Bitcoin will face increased volatility in the event of a shutdown. The direction of this volatility remains a matter of debate. It is recommended to keep an eye on the US stock markets, whose trends Bitcoin is likely to follow.

Conclusion: Shutdown no reason for Bitcoin panic

US media have counted 14 shutdowns since 1980, the most recent of which occurred at the end of 2018 during Trump’s first presidency. There is a certain amount of experience in dealing with such situations and the certainty that an agreement will be reached sooner or later. Bitcoin ‘s image as “digital gold,” used to protect assets in uncertain times, speaks for itself.

Accordingly, Bitcoin ETFs kicked off the new trading week yesterday with a strong $520 million in capital inflow. For the broader crypto industry, delays in US crypto policy due to a budget freeze would be sensitive, as the goal here was to speed things up. But Bitcoin and the crypto markets are currently far from panicking; for better or for worse, they have to prepare for the scenario of a shutdown.

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(Featured image by RDNE Stock project via Pexels)

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