Haciyev Reşit 
U.S. Government shutdown impacts crypto: Bitcoin hits record high following the partial shutdown of the U.S. federal government, markets experienced turbulence, while Bitcoin surpassed the $120,000 level on October 3. Faced with economic uncertainty, investors turned to digital assets and gold as safe-haven options. This development further strengthened Bitcoin’s position as an alternative store of value during traditional market volatility.
The Shutdown and Initial Effects
After the U.S. Senate failed to pass the temporary funding bill with sufficient votes, the federal government shut down on October 1. The halt in funding put around 150,000 federal employees at risk of being placed on unpaid leave.
Markets reacted immediately:
- S&P 500 futures dropped sharply,
- Gold climbed 1.1% to $3,913.70 per ounce,
- Bitcoin surged 2% overnight to $116,400, then broke above the $120,000 threshold the following day.
A Favorable Ground for Bitcoin
Economists predict that the uncertainty caused by the shutdown could push the Federal Reserve toward interest rate cuts. Historically, low real yields and a weak dollar have created favorable conditions for Bitcoin’s rally, making the current environment supportive of the crypto markets.
Charles Hoskinson, founder of Cardano, stated in a recent interview that Bitcoin could reach $250,000 by mid-next year. He emphasized that while traditional banking systems in the U.S., Russia, and China struggle with political constraints, cryptocurrencies like Bitcoin offer a global settlement layer that operates independently of such restrictions.
Broad Rally in the Crypto Market
Bitcoin’s surge also triggered gains across other digital assets:
- Ethereum, XRP, Solana, and Dogecoin rose between 4% and 7%,
- The CoinDesk 20 Index climbed 5% to reach 4,273 points.
The efforts of giants like Visa, Mastercard, and Stripe to integrate stablecoins highlight the acceleration of institutional adoption and reveal how crypto is increasingly blurring the lines with traditional finance.
Economic Risks and Policy Implications
Economists are warning about the potential impacts of the shutdown on the U.S. economy:
- A weekly decline of 0.1–0.2 percentage points in GDP,
- If extended throughout the quarter, the possibility of a 2.4% contraction.
These risks increase the likelihood of monetary easing, creating favorable conditions for new capital inflows into digital assets.
The U.S. government shutdown once again demonstrated how political dysfunction and economic uncertainty push investors toward alternative solutions. Bitcoin has further strengthened its role as both a hedge against the traditional system and a barometer of systemic fragility. According to experts, the prospect of crypto becoming a central pillar of global finance within the next 3–5 years is now seen as a more realistic scenario.
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