Prolonged US Government Shutdown Suppressing Bitcoin

• QCP Capital explained that Bitcoin and the broader crypto market are now taking their toll on the prolonged US government shutdown.
• The pause in the release of crucial data from various government agencies is preventing the Fed and analysts from making a more informed evaluation about the overall state of the economy.

Bitcoin (BTC) staged a significant recovery on Monday after dipping to as low as $106K last week. Analysts consider its price movement somewhat subdued as the US government shutdown drags on.

Some analysts, like CNBC’s Jim Cramer, claimed that no significant market movements were usually logged during the past government shutdowns. However, QCP Capital argued that the crypto market is already taking its toll from the prolonged event.

Botched Uptober

ADVERTISEMENTBitcoin notably surged in the immediate aftermath of the shutdown on October 1, culminating in a new all-time high of $126K during the first week of the month. An expected massive profit-taking ensued, but things took a turn for the worse when US President Donald Trump’s aggressive trade policy against China sent the crypto market liquidating over $19 billion in leveraged positions. From then on, the market has struggled to break out from the $115K-$116K resistance, which quelled the crypto community’s anticipated higher rallies in October’s Uptober mania.

Bitcoin and Crypto Market Wading Blindly with Caution

With the US government shutdown extending until November, QCP pointed out that the US Federal Reserve is “flying blind” as it only has a limited snapshot of the economy’s overall health. The same factor prevents analysts and algorithm-based tools relying on US economic data from making more informed assessments on the possible trajectory of Bitcoin and the crypto market. Thus, these somehow add to the ongoing market uncertainty, which is suppressing sentiment and price discovery.

For now, they will have to rely on key announcements from the Fed and the incoming reports from Big Tech, including Microsoft, Amazon, Apple, Google, and Meta, this week. Interestingly, QCP explained that investors appear to be putting more weight on the upcoming meeting between Trump and China’s President Xi Jinping than on Fed decisions and corporate reports.

ADVERTISEMENTQCP is unsure if the botched bull run this October will continue soon. Nonetheless, its report indicated that Bitcoin’s rebound to $116K by month’s end is crucial in determining if it will indeed resume its rally in November.

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