The Government’s partial shutdown in the US following the row over Donald Trump’s plans for a Mexico border wall has impacted government-run institutions, but its effect on Bitcoin seems to have made a little impact so far.
So far, during the third of such shutdowns in the last 12 months, stock markets have reacted with gains and losses yesterday with fears of a global economic slowdown against the backdrop of President Trump’s decision impacting government services in the US.
On the cryptocurrency front, little effect is evident so far. In fact, the trend has been upward over the past few days with Bitcoin trending between $3830.50 and $4,048.80 over the past two days. Although it’s still early days in the current shutdown, the first of such measures saw a drop in the price of Bitcoin, the second lasted only one night.
After two weeks, Bitcoin’s volatile nature makes it hard to establish whether any fluctuations are the result of what is happening in Washington. However, a prolonged shutdown has analysts considering what may be ahead, particularly with the planned Jan 24thlaunch of Bakkt scheduled for Commodity Futures Trading Commission (CFTC) approval.
Another factor to consider is how the shutdown will affect the U.S. Department of the Treasury, which has already been partially responsible for the Smithsonian being closed due to Federal Reserve Funds not being able to be transferred to government departments in the normal way.
There is a fear that the US dollar value might suffer as the Federal Reserve is seen as not being able to complete its usual tasks, although the country’s banks and other depository institutions still receive Federal Reserve support as normal.
Some economists have suggested that such a fear, although largely unfounded, might strengthen the position of cryptocurrencies, and in the extreme, provoke a dollar nosedive. It has become common to associate cryptocurrency with economic downturns in countries such as Venezuela, where Bitcoin use is propping up many local economies as the Venezuelan Petro becomes all but worthless.
At the very least, any damage to the value of the US dolljar because of an ongoing shutdown of government services is likely to bring more attention to alternative currencies such as digital money.
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