How Does The Recent Government Shutdown Affect The Crypto Market and Bitcoin Investors?
The partial US government shutdown is set to stretch on through Christmas as Congress adjourned Saturday with no deal in sight to end the impasse over funding for Donald Trump’s wall on the US-Mexico border.
Due to the shutdown, which saw several key US agencies cease operations, Trump said that he would remain in Washington over Christmas instead of going to Florida.
Trump has dug in on his demand for $5 billion for construction of the wall on the US border with Mexico. Democrats are staunchly opposed, and the absence of an elusive deal meant federal funds for dozens of agencies lapsed at midnight Friday.
I am in the White House, working hard. News reports concerning the Shutdown and Syria are mostly FAKE. We are negotiating with the Democrats on desperately needed Border Security (Gangs, Drugs, Human Trafficking & more) but it could be a long stay. On Syria, we were originally…
— Donald J. Trump (@realDonaldTrump) December 22, 2018
Wall Street stocks fell sharply in volatile trading on Friday, with the Nasdaq confirming it is in a bear market, as concerns of slowing economic growth led investors to flee stocks in high-valuation sectors such as technology and communication services. With Friday’s losses, the Nasdaq has fallen nearly 22 percent from its Aug. 29 high. The tech-heavy index dropped to its lowest level since August 2017.
The benchmark S&P 500 index, already on pace for its biggest percentage decline in December since the Great Depression, hit its lowest level since July 2017. It is now down 17.5 percent from its closing high on Sept. 20. The Dow Industrials fell to its lowest level since October 2017 and has declined 16.3 percent from its Oct. 3 closing high.
So how will this affect the crypto market?
So, the Wall Street is evidently in trouble, however, not the crypto market. In fact, Bitcoin has made gains since the shutdown. There are two schools of thoughts that operate here. The first one is the people who think that cryptos are heavily reliant on traditional financial markets, and it is the big institutes with their big money who control and manipulate the prices.
The second set of people are the ones who think that during times of economic instability and crashes, cryptos will act as traditional gold and will sustain better value than fiat currencies and stocks.
However, all is not well in the crypto ecosystem. Bakkt, an upcoming trading platform of the Intercontinental Exchange will face further delays from their proposed date of Jan 24th. There are several reasons for their delays, the biggest one being lacking approval from the US Commodity Futures Trading Commission (CFTC). However, the recent loss of liquidity will play a key part in further extending he CFTCs timeline.
Eventhough, cryptos have not been used much for their intended use, P2P value transfer. Times like these is when they can show that they are a valuable asset for storing value, like gold.