NYDIG Explains: How Will Bitcoin Price React If the US Government Shuts Down?

• The US Congress faces the possibility of a government shutdown if it cannot reach an agreement on a funding bill by Sunday, October 1st.
• According to NYDIG, a leading Bitcoin service provider, the duration of a government shutdown could vary between one and 35 days depending on the political landscape.
• The SEC has delayed numerous decisions related to spot Bitcoin ETFs. These ETFs would have provided investors with the opportunity to buy and sell Bitcoin directly through a regulated platform.

Time is running out for the US Congress to reach an agreement: How will the Bitcoin price react if the US government shuts down?

Hours Left Until the US Government Shuts Down

If the US Congress cannot agree on a funding bill related to financing by Sunday, October 1st, there is a possibility of a government shutdown. This situation could have significant consequences for the financial sector, especially concerning the approval of exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC).

According to NYDIG, a prominent Bitcoin service provider, the duration of a government shutdown could vary between one and 35 days depending on the political landscape. Consequently, this could hinder the SEC’s capacity to evaluate and decide on various ETF applications, including those related to Bitcoin and Ethereum.

The SEC recently experienced a two-week delay in the period leading up to October 16-19. This development indicates that the regulatory agency is preparing for a potential shutdown. As a result, the SEC is now facing a final decision date in mid-March for these applications.

Bloomberg ETF analyst James Seyffart predicts similar delays for other applicants such as Fidelity, VanEck, and WisdomTree. He also suggests that the SEC may adopt a consistent approach to reviewing and approving or rejecting all these ETFs simultaneously.

Ethereum Futures-Based ETFs Are Beginning

Futures-based Bitcoin ETFs have already been launched in the US, allowing investors to track Bitcoin’s price movements on regulated exchanges and profit from them. While spot Bitcoin ETFs are still awaiting approval, these futures-based alternatives have attracted billions of dollars in assets since their introduction in October 2021.

Several issuers have applied to the SEC to launch futures-based Ethereum ETFs. These ETFs would track the performance of Ethereum futures contracts traded on the Chicago Mercantile Exchange (CME), which began trading in February 2021.

The Securities and Exchange Commission is not considering spot Ethereum ETFs, and no one has applied for such a product yet. As a result, individuals looking to buy and sell Ethereum directly may face longer waiting periods compared to those opting for futures-based products.

Market Response

Following uncertainties surrounding ETF approvals and a potential government shutdown, Bitcoin’s value rose by 0.41%, reaching $27,010. Gold experienced a 0.96% decrease, and the overall stock market saw declines, with the S&P 500 dropping by 0.27% while the Nasdaq Composite had a slight increase of 0.14%.

A report by Moody’s suggests that a government shutdown could harm the US credit rating. The rating agency states that such an event would highlight doubts about reaching consensus on fiscal policy and dealing with larger fiscal issues in the future.