The cryptocurrency market is preparing for a sharp rise due to the regulatory crisis in Washington

The probability of a US government shutdown has increased to 99% since October 1, according to Polymarket. Analysts warn that the shutdown could pose a serious risk to the cryptocurrency market, as it creates uncertainty and affects investor sentiment on a global scale.

The reason for the potential shutdown is the lack of agreement between Republicans and Democrats on the budget. The former propose a temporary extension of funding until November 21, while the latter demand an increase in healthcare spending. President Donald Trump has already stated that the country may face a temporary shutdown of government agencies, and Vice President J.D. Vance called this scenario «inevitable.»

The consequences for the crypto market could be significant. During a shutdown, the government stops publishing macroeconomic data, such as inflation and employment. This makes it difficult to assess the state of the economy and predict the Fed’s actions. The regulator, in turn, is considering a second rate cut in October, which could be a bullish signal for digital assets. At the same time, the government shutdown will slow down the adoption of key decisions, including the CLARITY Act and applications to launch spot crypto ETFs.

Historically, the market’s reaction to such crises has been mixed. In 2013, during a 16-day shutdown, bitcoin BTC $111,413.00 Mezo Wrapped BTC -0.22% Market capitalization $58.79 million VOL. 24 hours $1.26 billion grew by 14%, and during a record 35-day shutdown in 2018, it fell by 6%. According to Julio Moreno, head of research at CryptoQuant, the situation today is more reminiscent of 2013, when the asset was in an upward cycle.

Bitcoin is currently trading at $ 112,900. Analysts agree that if the shutdown is confirmed, we should expect increased volatility: the crypto market, like the S&P 500, usually reacts to such events with short-term dips, but they are unlikely to have a long-term effect on BTC.