The possible government shutdown in the US has led to expectations of a rise in the price of Bitcoin (BTC). According to analysts interviewed by Bloomberg, the price increase could be a sign of increased uncertainty in the US banking sector. Stephane Ouellette, co-founder of FRNT Financial, stated that the rally could be seen as a security measure against further banking turmoil in Bitcoin.
Ouellette’s comment is in line with recent remarks by Martin Gruenberg, Chairman of the US Federal Deposit Insurance Corporation (FDIC), who stated that the banking sector is exposed to significant downward risks due to inflation and high interest rates. However, any price breakdown from the $30,000 level due to fear, uncertainty, and doubt (FUD) caused by a government shutdown in the US could be a psychological gain for Bitcoin investors.
James Butterfill, Research Director at CoinShares, said in his recent Bitcoin prediction that there is a high probability of the largest cryptocurrency making a jump if there is a government shutdown in the US:
This scenario bears similarities to the debt ceiling impasse earlier this year, which supported Bitcoin’s price.
Negativities Surrounding the Cryptocurrency Market
While the possible government shutdown in the US is expected to be a significant trigger for a price increase in BTC, it could also lead to liquidity constraints for cryptocurrency exchanges and companies.
Furthermore, the shutdown could cause significant disruptions in the process due to personnel shortages, as it coincides with the period when the US SEC is preparing to approve Ethereum futures ETFs.
