Key takeaways:
Yields on US 10-year Treasurys declined, highlighting growing risk aversion and demand for safe-haven assets.
Spot Bitcoin ETFs faced $430 million inflows while equities stayed muted, signaling potential decoupling from traditional markets.
Bitcoin (BTC) reached a two-week high on Wednesday following the United States federal government shutdown. However, investors remain cautious, recalling that the 2018 shutdown triggered a sell-off amid concerns about slower economic growth.
With no resolution in place, federal agencies were ordered to activate contingency measures, forcing hundreds of thousands of employees to stay home. Attention now turns to the length of the shutdown, with another Senate vote scheduled for Wednesday.
The Trump administration has warned it may pursue mass layoffs if no agreement is reached, a threat that has made traders more cautious and risk-averse.
US 10-year Treasury yield (left) vs. Bitcoin/USD. Source: TradingView / Cointelegraph
Yields on the US 10-year Treasury fell on Wednesday, showing that traders are willing to accept lower returns in exchange for the safety of government-backed debt. Gold also surged to a record $3,895 per ounce, signaling stronger demand for traditional hedges.
At first glance, the shutdown appeared to provide a short-term boost for Bitcoin, but questions remain about its durability. The US stock market showed little immediate reaction, though pressure came from ADP data pointing to 32,000 fewer private payrolls in September, while August figures were revised to show a net loss of 3,000 jobs.
Bitcoin lost 9% during the 2018 US government shutdown
When the US government shut down in December 2018, Bitcoin dropped by 9%. This time, the economic drag could surface quickly as government spending slows sharply and the release of official data faces delays.
S&P 500 futures (left) vs. Bitcoin/USD in 2018-19. Source: TradingView / Cointelegraph
The US stock market began a 12% correction just 10 days before the government shutdown on Dec. 22, 2018, but the full decline was reversed in less than a month. Investors who held their positions and looked past the…
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