- Bitcoin rallied back to over $118K after the clash between Republicans and Democrats in Congress led to the US Government’s shutdown.
- Many see it as a validation of BTC’s “digital gold” status.
Bitcoin (BTC) rallied nearly 5% between a $112,805.89 low and a $118,168.80 high in the last 24 hours. The latest development elevated the market cap of the premier crypto asset’s 19.92 million circulating supply back to more than $2.35 trillion.
BTC’s rally came in response to the US federal shutdown after Republicans, backed by President Donald Trump, and Democrats got into a stalemate in Congress over a short-term spending bill. The event marks the first US government shutdown in nearly seven years.
Key Events Around the US Government Shutdown
The roadblock occurred when the parties disagreed on health care funding concerns, with the Democrats rejecting the Republicans’ proposal for a temporary funding extension. Meanwhile, Trump capitalized on the opportunity to push his agenda toward permanently slashing the funding for several social programs.
While Trump didn’t elaborate on the specific programs in danger of getting the ax, his past pronouncements hint that it could lead to massive layoffs in federal agencies. Additionally, many fear that it could affect many Democrat-supported initiatives and agencies not bending the knee to the agenda of the present administration.
Analysts Downplay Market Effects of US Government Shutdown
Despite the impasse caused by the butting of heads in Congress, several analysts downplayed the possible major effects of a government shutdown on the market. One of them was CNBC Mad Money host Jim Cramer who claimed that historic data suggests no significant market movements were logged during such events.
Cramer’s primary concern only centered on the likely delays the affair may cause to the scheduled releases of key economic data, which are critical to the monetary policies of the US Federal Reserve. He reminded the public to “keep calm and carry on” because it will be business as usual in the markets.
Bitcoin’s “Digital Gold” Narrative Playing Out
Without any other macroeconomic or market-shaking events influencing Bitcoin’s recent spike, many consider the prime digital asset’s recent movement as a display of its “digital gold” narrative playing out. This is a central and increasingly popular thesis among crypto investors and advocates, arguing that BTC shares the resiliency of gold in times of economic or political uncertainty.
Deutsche Bank notably observed that Bitcoin is already pursuing the same path of adoption that gold once embarked. The trend follows the mainstream realization that BTC possesses the same core characteristics as the precious metal. BTC is driven by scarcity and has low correlation with traditional assets, making it an effective tool for wealth preservation, a hedge against inflation, and a safe haven against economic and geopolitical turbulence.
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