Bitcoin hits $118K after US Government Shutdown: Now What?

Takeaways from the conference:

• US Treasury yields have declined in recent months, reflecting a rising risk aversion as well as heightened demand from investors for safety-veil assets.

• Spot Bitcoin ETFs saw inflows of $430 million while stocks remained quiet, indicating a possible decoupling with traditional markets.

BitcoinBTCThe dollar reached its highest level in two weeks on Wednesday after the United States government shut down. Investors remain cautious as they recall that in 2018, the shutdown caused a drop due to concerns over a slower economy.

Because there is no agreement, agencies have been forced to take contingency actions, which has resulted in hundreds of thousand of workers being sent home. The focus now shifts to the duration of the shutdown with a Senate vote set for Wednesday. 

Trump has threatened to lay off thousands of workers if an agreement cannot be reached. The threat has made traders cautious and more risk averse.

Earnings from the US 10-year Treasury On Wednesday, the price of government debt fell. Traders are now willing to take a lower rate in return for security. The price of gold also soared, reaching a new record at $3,895 an ounce. This indicates a stronger demand for hedges.

Bitcoin may seem to benefit from the shutdown in the short term, but there are still questions about its longevity. US stock markets showed no immediate reaction to the shutdown, although ADP data indicated that private payrolls were down 32,000 in September. August’s figures had been revised and now show a net reduction of 3,000 positions.

Bitcoin dropped 9% due to the US shutdown in 2018.

Bitcoin fell by 9% when the US Government shut down on December 18, 2018. The economic slowdown could be felt quickly this time as the government’s spending is expected to drop sharply, and official data will take longer to release.

In the US, the stock market started a correction of 12% just 10 days prior to the shutdown. However, the entire decline reversed itself in less than one month. Investors who held onto their positions and ignored 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. In spite of this, Bitcoin faced greater challenges, as it had already fallen 42% during the previous two weeks, leading up to November 25, 2018. Analysts argued that the steep sell-off was caused by stricter regulations.

The Financial Action Task Force, or FATF (Financial Action Task Force), held its October 2018 meeting. 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

In total, $430 Million 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.