Bitcoin has broken past the $118,000 mark, gaining more than 3% in the past 24 hours as markets digested the news of a U.S. government shutdown.
While shutdowns traditionally increase risk aversion in financial markets, the cryptocurrency sector has reacted differently, with a broad-based rally across major assets.
The political standoff stems from a continuing resolution (CR) passed by Republicans without policy additions demanded by Democrats, led by Senator Chuck Schumer. The dispute centers on permanent extensions of Affordable Care Act tax credits, which Democrats argue are essential to prevent millions from losing healthcare coverage.
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According to Ryan Lee, chief analyst at Bitget, both Bitcoin and the S&P 500 stand to benefit from the shutdown, as it may usher in a period of lower U.S. interest rates. He noted that Bitcoin’s perceived independence from government and political uncertainty makes it especially attractive to traditional investors seeking stability.
“While corrections are likely along the way, most promising altcoins appear to have bottomed out,” Lee said, adding that Bitcoin reclaiming the $116,000 level is a bullish signal heading into October, a historically positive month for the cryptocurrency.
Crypto trader/analysts Jelle described BTC upward price action as “pushing through the resistance like it isn’t even there.”
“One last thing to ‘worry’ about: a sweep of the September highs. Clear those, and the bears will have very little leg to stand on. Higher,” he told X followers.
Market reactions to government shutdowns have been mixed in the past. During the 2013 shutdown, equities slumped while Bitcoin surged, whereas in 2019 both asset classes declined. “Shutdowns always disrupt the flow of government, but the market’s reaction is never uniform,” macro resource Milk Road Macro wrote on X.
This latest shutdown, the first in six years, has coincided with gains in both Bitcoin and gold, reinforcing their roles as safe-haven assets. Technically speaking, the four-hour chart’s breakout of Bitcoin above the 50 EMA strengthens the bullish argument, and the RSI remains below overbought levels, suggesting the potential for additional upside.
Additionally, Bitcoin long-term holders continue to grow their stash with these accumulation addresses now holding a record 298,000 BTC. This trend suggests that they are optimistic about Bitcoin’s potential to continue rising.
Bitcoin closed September at $114,000, up 5% despite volatile swings that saw it drop to $108,650 earlier in the month. Analysts suggest that this level may have marked a local bottom. Data from Swissblock supports the view, noting that its aggregated impulse signal measuring price momentum across the top 350 assets collapsed to 20% from over 100%, a level historically linked to cycle bottoms and subsequent recoveries.
Historically, September has been Bitcoin’s weakest month, averaging –3% returns across 13 years. However, this year’s bullish September close is rare, and past instances of similar performance have preceded strong rallies in Q4. In fact, Bitcoin gained 48% in Q4 2024, 57% in Q4 2023, and an extraordinary 480% in Q4 2013.
Outlook
With the shutdown amplifying risk-hedging flows into digital assets, analysts argue that Bitcoin is fulfilling its original purpose, serving as an escape mechanism during periods of institutional uncertainty.
If history repeats itself, the current quarter may deliver the most significant gains of the ongoing bull cycle.
