- James Butterfill expects Bitcoin to rally if the U.S. government shuts down.
- BTC has a history of performing well during periods of uncertainty.
- The world’s largest cryptocurrency is up nearly 4% today.
Bitcoin will likely rally if the U.S. government shuts down on October 1, says James Butterfill, Head of Research at CoinShares.
Why might BTC rally during a shutdown?
The largest cryptocurrency by market capitalization is already trading nearly 4% higher on Thursday as federal employees began receiving notices that a government shutdown may be imminent. That initial gain could extend once a shutdown starts, according to Butterfill, because investors may interpret a funding lapse as a sign of instability and seek refuge in Bitcoin.
This scenario resembles the debt ceiling impasse earlier this year, which helped lift Bitcoin prices.
Bitcoin continues to hold solid support around the $25,000 level.
U.S. banks still face downside risks
Bitcoin showed strength earlier this year when institutions such as Silicon Valley Bank and Signature Bank collapsed, highlighting how the cryptocurrency can outperform during periods of financial uncertainty.
U.S. banks may not be fully out of danger yet. Martin Gruenberg, Chair of the Federal Deposit Insurance Corporation (FDIC), recently warned that inflation and higher interest rates remain meaningful downside risks for the banking sector.
Another potential near-term catalyst for Bitcoin is approval of a spot BTC exchange-traded fund. U.S. lawmakers recently urged SEC Chair Gary Gensler to allow spot Bitcoin ETFs, which could provide fresh demand and greater institutional access.
On Thursday, Rob Ginsberg of Wolfe Research also said Bitcoin is worth considering at its current price levels, adding to the list of bullish signals for the cryptocurrency.