Bitcoin Hits $118k After US Gov Shutdown. What Comes Next?

Takeaways from the conference:

• US Treasury yields have declined in recent months, reflecting a rising risk aversion as well as accelerating demand for safety-haven investments.

• Spot Bitcoin exchange-traded funds (ETFs) saw $430 millions inflows, while equity markets remained muted. This could indicate a potential breakaway from the traditional market.

BitcoinBTC( ) hit a new two-week peak on Wednesday, following the shutdown of the United States Federal Government. But investors are cautious. They remember that last year’s shutdown led to a market sell-off due to fears of slower economic growth.

As there is no agreement, agencies are forced to take contingency actions, which means that hundreds of millions of workers will be staying home. The focus now shifts to the duration of the shutdown with a Senate vote set for Wednesday. 

Trump’s administration warned that it could pursue mass layoffs in the event of a failure to reach an agreement. This has caused traders to become more risk-averse and cautious.

Earnings of the US 10-year Treasury On Wednesday, the price of government debt fell. This indicates that traders will accept lower returns for security. Gold prices also rose to an all-time high of $3,895 for one ounce.

Bitcoin may seem to benefit from the shutdown in the short term, but there are still questions about its longevity. US stocks showed no immediate response, but ADP’s data showing 32,000 less private payrolls for September and revised August numbers showing a loss of 3,00 jobs was a pressure.

Bitcoin fell 9% in the US Government Shutdown of 2018.

Bitcoin decreased by 9% in December 2018 when the US shutdown. This time the slowdown in government spending and delays with the official release of data could cause an economic slump to surface.

Just 10 days before Dec. 22nd, 2018, the US stock market experienced a 12% decline. The full drop was reversed within a little over a month. Investors who held onto their positions and pushed past short-term fluctuations ultimately won.

Bitcoin’s price fell from $3.900 to $3.550 over the course of the 35-day shutdown in December 2018. Still, cryptocurrency was facing greater problems at that time. It had dropped by 42% over the last two weeks before Nov. 25th, 2018. The sharp drop in cryptocurrency prices was attributed by some analysts to stricter regulation.

Financial Action Task Force (FATF), in October 2018 updated its guidelines The act covers virtual assets, such as cryptocurrency exchanges and some wallet providers. Intergovernmental organisation representing about 200 jurisdictions. Its mandate is Anti-Money Laundering, and Counter-Terrorism Financing. Some traders might have been expecting increased regulatory scrutiny.

Related: US Senate to hold hearing on crypto taxes as IRS offers relief on corporate tax

This $430,000,000 in net inflows into spot Bitcoin ETFs The recent separation of the asset from equity has strengthened its reputation as a hedge. The vehicles manage $147 billion worth of assets. Gold, which is a market valued at $26 trillion, provides $461 billion via ETFs.

The current conditions indicate that the shutdown of the federal government could be favorable to Bitcoin in the coming 30 days, despite the fact that short-term weakness on traditional markets is a concern. The continued corporate demand for Bitcoin to be used as a safe-haven asset will also play a major role in supporting the bullish trend during this period of increased uncertainty.

The article does not provide legal advice or investment recommendations and it is intended for informational purposes only. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.