Bitcoin (BTC-USD) climbed to its highest level in more than two months on Thursday as the US government officially shut down.
The world’s largest digital asset by market capitalisation rose by around 3.5% in the past 24 hours, briefly touching $119,455 (£88,516) before pulling back to now change hands for around $118,500. This marks bitcoin’s (BTC-USD) strongest price since mid-August.
The global cryptocurrency market cap today is $4.17tn, an increase of 4.0% in the last 24 hours. Bitcoin (BTC-USD) dominance is at 56.7% and ethereum (ETH-USD) dominance is now at 12.7%, showing that bitcoin is still the strongest asset in terms of investor appetite.
The rally coincided with the US government’s failure to reach a funding agreement, forcing agencies to close and furloughing roughly 750,000 workers at a daily cost of an estimated $400m.
The shutdown also halts the release of key economic data, including Friday’s closely watched nonfarm payrolls report, a development that could delay monetary policy signals and alter risk sentiment.
Read more: What price will bitcoin be by Christmas?
“The US shutdown injects a new variable, removing critical macro data and amplifying uncertainty,” said Timothy Misir, head of research at BRN. “Options markets already reflect this fragility, with traders hedging for drawdowns. At the same time, bitcoin (BTC-USD) options remain cheap relative to realized volatility.”
In other words, investors are paying for protection against a sharp drop in bitcoin (BTC-USD), but that insurance is still relatively inexpensive given how volatile the cryptocurrency has been. This points to a market that is on edge, preparing for turbulence, while also leaving room for traders to cheaply bet on big price swings.
Gold (GC=F) has also been a major beneficiary of the mounting fiscal and political stress in the US. The precious metal closed September with a 12% monthly gain, its strongest rally since 2011, underscoring a broader investor shift into hard assets as Federal Reserve officials continue to warn that inflation remains “too high.”
This comes as New York Fed president John Williams reiterated that rate cuts remain contingent on incoming data, data that may now be delayed by the shutdown.
Read more: Key skills to keep your job in the AI era
Crypto, meanwhile, is caught between supportive inflows and cautious derivatives positioning. Exchange-traded funds (ETF) inflows have provided a cushion, with bitcoin (BTC-USD) spot ETFs recording $676m in net inflows on Wednesday, marking a third consecutive day of gains. Ethereum (ETH-USD) spot ETFs saw $80.79m in inflows over the same period.
