How Bitcoin will react to US Government Shutdown

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Amidst an imminent government shutdown due to Congress's stalled federal appropriations bill for the fiscal year beginning October 1, 2023, the financial sector holds its breath. The potential shutdown's ripple effects are poised to stretch beyond traditional markets, reaching into the cryptocurrency sphere, particularly Bitcoin, according to Greg Cipolaro, Global Head of Research at NYDIG .

Federal Shutdowns: An Emerging Norm

The occurrence of federal shutdowns is becoming less sporadic. Over the years, 10 instances have been recorded, with the most recent one in 2018 — 2019 lasting a record 35 days, costing the government an estimated $5 billion. It's difficult to predict a shutdown's duration, as it largely hinges on lawmakers' negotiations. However, the increasing political polarization hints at a longer standoff this time around.

Credit Rating Agencies on High Alert

Moody’s, holding a AAA credit rating on the US, sounded the alarm on September 27, 2023, cautioning against adverse impacts of a shutdown. This echoes past sentiments, like the 2011 S&P downgrade amidst debt ceiling debates, spotlighting weakened US fiscal policymaking. The persisting discord among political factions continues to unsettle credit rating agencies, potentially foreshadowing broader financial market disruptions.

Bitcoin ETF Awaits SEC Green Light

A direct casualty of the possible shutdown is the delay in the Securities and Exchange Commission (SEC) approval for a spot Bitcoin ETF. The furlough would significantly trim down SEC's staff from 4,604 to a mere 437, stalling critical financial product approvals. Notably, the SEC has already postponed decisions on most ETFs, anticipating a prolonged shutdown. The spotlight is on the