At 12:01 AM EDT on October 1, 2025, the U.S. federal government entered a shutdown after Congress failed to pass a budget or a temporary funding measure. This deadline stems from the start of the U.S. fiscal year on October 1, and the necessary "appropriations bills" — legislation to fund federal departments — were not enacted. The effects were immediate: Bitcoin's price rose by 1.46% within an hour this morning, and gold reached a new record high today.

Why Did the U.S. Government Shut Down?

This is the first government shutdown in seven years, with the last occurring during President Trump's first term. As always, political division played a role: House Republicans wanted a short-term funding resolution without additional conditions, while Democrats demanded guarantees to preserve health insurance subsidies under the Affordable Care Act and to reverse Medicaid cuts. Because the Republican majority in the House couldn't secure two-thirds support in the Senate, both proposals failed, triggering the shutdown. This shutdown is different from previous ones. The U.S. government, at Trump's request, considered permanent layoffs (reduction in force) instead of just temporary suspensions (furloughs). Some agencies have already been instructed to submit contingency plans.

Expected Effects on the Stock Market and Cryptocurrency

A shutdown creates additional uncertainty: key economic data (such as employment figures) may be delayed or even canceled, making it harder for investors to assess the economic situation. In response to this uncertainty, futures for major U.S. indices like the S&P 500 and Nasdaq have already declined this morning. The U.S. dollar has also weakened, which is typical when capital retreats from risky positions. In such a climate, two opposing forces often occur:

• On one hand, investors may flee from risky assets (stocks, growth stocks, crypto) to safer havens.
• On the other hand, expectations of interest rate cuts (in response to weakened economic outlooks) may encourage investors to return to riskier assets, which offer higher potential returns.

If the shutdown persists, the negative impact may outweigh the speculative hope for recovery. Companies may delay or cancel projects, consumers may spend less, and investments may lag. This could slow the economy more than speculative hopes for recovery can compensate.

Impact of the U.S. Shutdown on the Cryptocurrency Market

Cryptocurrencies often move in tandem with risky investments and can receive an extra boost when the economic situation is uncertain. In times of stress, we sometimes see a "flight to quality" within the crypto world, where capital shifts to the most traded, liquid assets like Bitcoin. Additionally, statements from politicians, new regulations, or government measures can further influence the market. However, the crypto market doesn't always move in sync with stocks; sometimes crypto serves as an alternative for investors temporarily withdrawing from traditional markets, especially when the dollar weakens or capital seeks alternative stores of value.

Why Is Bitcoin Responding This Morning to the Shutdown?

This morning, we saw Bitcoin's price rally, reaching above $114,000. This movement aligns with broader market sentiments: due to dollar weakness and uncertainty surrounding traditional markets, investors are seeking alternatives. Analysts note that today's strong gold rally serves as a catalyst for positive sentiment in riskier markets — Bitcoin can benefit as a "digital counterpart" to safe havens. Some analyses suggest that when gold rises due to macro uncertainty, Bitcoin and crypto sometimes "ride along" as investors look for diversification outside traditional markets. Nevertheless, Bitcoin's rise is relatively modest compared to gold's leap. Moreover, factors such as institutional investor demand, technical support and resistance levels, and macro forecasts (like inflation and interest rate expectations) remain decisive. What seems like a positive morning can quickly turn if economic figures disappoint or political problems worsen.

Gold: A New Record in Turbulent Times

What stands out today is that gold is soaring: spot gold reached an all-time high of approximately $3,875.32 per ounce. December futures closed around $3,887.40. Futures are sometimes higher because investors estimate the future value of gold, but the record for actual gold remains the spot price. The reasons for the new record are diverse:

• Seeking a safe haven: investors are fleeing to assets considered more stable in times of political and economic stress.
• Interest rate expectations: weaker economic outlooks — partly caused by the shutdown — lead markets to speculate on interest rate cuts by the Federal Reserve. Lower rates reduce the opportunity cost of holding non-yielding assets like gold.
• Dollar weakness: when the U.S. dollar weakens against other currencies, gold becomes more attractive to foreign buyers.

Gold has been rising for months, and this record high shows the trend continues. Some analysts warn that gold has risen too much in the short term and that a pause or decline may follow. Still, buyers remain active as long as the economic situation remains uncertain.

Disclaimer: This is not financial advice. Always consider your own research or consult professional advice before investing.