Washington is in a bit of a tangle. A partial government shutdown has settled in, bringing with it the usual mix of stress and confusion for federal workers. Yet, the crypto markets, never ones to follow a predictable script, seem to be shrugging it off.
- Despite a US government shutdown, crypto markets like Bitcoin and Ethereum are showing surprising resilience, with Bitcoin reaching $121,000 and Ethereum holding above $4,500.
- Historical patterns suggest government shutdowns have not negatively impacted the S&P 500, and Bitcoin often moves in tandem with this index, indicating potential positive forces for digital assets.
- Analysts suggest Bitcoin is undervalued compared to gold, with potential for significant price increases by year-end, driven by investors seeking protection against inflation and currency devaluation.
I’ve been watching the numbers, and they tell a story of surprising resilience. Bitcoin, for instance, just touched $121,000. That’s a level we haven’t seen since mid-August, a solid step up from its all-time high of $124,000 back on August 14.
Ethereum, not to be outdone, has been holding steady above $4,500. This marks its strongest showing in three weeks. It’s almost as if the digital assets are operating on a different calendar, or perhaps, a different set of rules entirely.
Market Currents and Historical Echoes
The US government closed its doors on October 1. Lawmakers simply couldn’t agree on a funding plan. You might expect such news to send shivers through financial markets, but history offers a different view.
Think about the S&P 500 index. It has actually gained ground during every government closure since 1990. It’s a curious pattern, isn’t it? And these days, Bitcoin often moves in step with that index.
So, those same positive forces might be at play for digital currencies right now. It suggests that sometimes, what seems like a setback for one part of the economy can be a quiet tailwind for others.
Bitcoin also appears to be catching up to the rally we’ve seen in the gold market. Gold recently hit a new all-time high, climbing past $3,900. It’s a reminder that investors often look for safe havens.
Analysts at JPMorgan have weighed in on this. They suggest Bitcoin looks quite undervalued when compared to gold, especially when you adjust for volatility (how much its price swings). Their outlook points to Bitcoin potentially reaching $165,000 by the year’s end.
This movement is often called the “debasement trade.” It’s driven by everyday investors. They are putting money into assets like gold and Bitcoin. They see these as a way to protect their wealth against government deficits, rising inflation, and the weakening of traditional currencies.
John Haar, a managing director at Swan Bitcoin, shared his perspective. He said, “Over the longer term, with global debt at record highs and fiat currencies under pressure, bitcoin is increasingly seen as a liquid, non-sovereign reserve asset.”
He added, “We’re watching a shift from speculative trades to strategic allocations, and we believe this will push prices beyond prior highs.” It’s a shift from quick bets to careful, long-term planning.
October’s Promise and Broader Signals
This longer view fits nicely with a seasonal trend many in crypto call “Uptober.” It’s a playful name, but it holds some truth. Historically, October has been Bitcoin’s strongest month.
Since 2013, Bitcoin has averaged gains of more than 14% during October. It’s a pattern that gets people talking. And this year, it seems the trend might continue.
Gadi Chait, head of investment at Xapo Bank, told The Block that “Early signs suggest this year may be no exception.” He pointed out that “Even the U.S. government shutdown hasn’t derailed momentum, showing how resilient bitcoin has become of late.”
It’s not just Bitcoin and Ethereum feeling the lift. Companies tied to the crypto space are also seeing good days. Shares of Coinbase, for example, climbed by more than 7%.
Bullish and Circle, two companies that went public earlier this year, saw even bigger jumps. Bullish rose 11%, and Circle popped by 16%. These are strong signals from the wider market.
Adding to these positive signs are significant inflows into exchange-traded funds (ETFs) for Bitcoin and Ethereum. This week alone, nearly $2.4 billion flowed into these combined funds. It shows growing institutional interest and trust.
The larger economic picture also provides a supportive backdrop. Data from CME FedWatch suggests a high probability, nearly 98%, of another quarter-point interest rate cut at the Federal Reserve’s October meeting.
The Fed already lowered rates in September. That was the first time in four years. It sparked an initial rebound in both traditional stocks and digital assets. A second cut would extend this softer monetary stance, often seen as good for riskier assets.
So, while Washington sorts out its funding, the crypto markets are charting their own course. It’s a fascinating time to watch how these digital assets continue to mature and react to the world around them.
