As of October 1, the potential for a U.S. government shutdown has intensified, prompting investors to seek security in safe havens. Data from Polymarket suggests that the possibility of a shutdown has surged to 85 %, resulting in noticeable increases in the prices of Bitcoin, gold, and silver. The ongoing debates between Republicans and Democrats over health and budget expenditures have emerged as the primary concern unsettling markets.
Impact of Shutdown Scenario on Markets
Should Congress fail to reach a budget agreement, the U.S. government faces the risk of shutting down from October 1. Historically, during similar periods, the S&P 500 index has shown a tendency to weaken, exerting pressure on both traditional and cryptocurrency markets. A shutdown could obstruct the release of essential economic indicators such as unemployment data and inflation reports, potentially hindering the Federal Reserve’s capacity to make informed new decisions. Additionally, agencies like the SEC and CFTC might be forced to reduce their workforce, potentially delaying the approval of cryptocurrency ETF applications.
Analysts emphasize the increasing risk of pullbacks in stocks and cryptocurrencies in the short term. Bitcoin and altcoins, known for their high beta, are anticipated to experience heightened volatility. Last week, the cryptocurrency market saw two instances of liquidations surpassing $1 billion, revealing the fragility in investor risk appetite. Nonetheless, historical data indicates that post‑shutdown recoveries and rally movements are frequently observed.
Current Status of Gold, Silver, and Bitcoin
The emergence of a U.S. government shutdown risk has driven notable increases in precious metals. The price of gold per ounce reached $3,872 on September 29, marking a 50 % gain since the beginning of the year and nearing the $4,000 mark. Silver per ounce climbed to $47, a peak not seen in the last 14 years. The shift towards risk aversion elevates precious metals while strengthening the quest for safe havens among investors.
In the cryptocurrency market, the situation is more complex. During the shutdown period at the end of 2018, Bitcoin experienced a decline in value but subsequently saw a significant rise. Similarly, today, although pressure persists in the short term, there is speculation that new buying opportunities may arise in the medium term. Following the statement by U.S. Vice President JD Vance indicating a probable shutdown, the likelihood increased to 85 % on Polymarket, leading investors to swiftly adjust their positions.