Bitcoin
and other cryptocurrencies were rising Friday as traders turned bullish on the prospect of a U.S. government shutdown which supports philosophical tenets of decentralized currencies but risks draining liquidity from wider markets.
The price of Bitcoin has risen 2% over the past 24 hours to above $27,000, with the largest digital asset moving out of the range around $26,000 that has dominated for more than a month.
“Despite large-scale equity weakness across most sectors … Bitcoin currently sits at a nine-day high, reclaiming an important push-and-pull level at $27,000,” said Luke Nolan, an analyst at digital asset investment group
CoinShares.
Bitcoin has suffered from historically low volatility and trading volumes since the summer, a factor that would be a long-term disadvantage but likely has kept prices afloat amid a recent slide in the stock market. The
Dow Jones Industrial Average
and
S&P 500
are on track to end a brutal September, while Bitcoin is poised to beat history by rising in this month for the first time in seven years.
While the possibility of a U.S. government shutdown—which could happen this weekend—is hanging over equity markets, some crypto traders are seeing a bullish angle for Bitcoin.
“Some participants view the possible government shutdown as bullish for cryptocurrencies, as it plays directly into the narrative of non-sovereign currencies not being affected by government procedure,” said Nolan. “The possible shutdown is a large-scale reflection of the periodic dysfunction of due process, which fits well into the philosophical narrative of crypto currencies.”
Indeed, a government shutdown could boost Bitcoin—but there are risks. When the U.S. flirted with whether or not to raise the debt ceiling in May, Bitcoin suffered, despite this situation apparently offering a similar opportunity for principle-based gains. That’s because a government shutdown, like the debt ceiling issue, risks draining liquidity from markets as investors broadly rotate into safer bets. Bitcoin could be an unexpected casualty amid a wider risk-off move.
Beyond Bitcoin,
Ether
—the second-largest crypto—gained 3% to $1,670. Smaller tokens or altcoins were also buoyant, with
Cardano
climbing 2% and
Polygon
popping 3%. Memecoins also advanced, with
Dogecoin
up 1% and
Shiba Inu
jumping 2%.
Write to Jack Denton at [email protected]
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