US government shutdown, bitcoin breaks out, approaching historical peak

(Dan Tri) - When the US government shut down, stocks plummeted but bitcoin soared, sparking debate: is this real "digital gold" or just a short-term boost that is prone to collapse?

In the early morning of October 1 (Washington DC time), the US Federal Government officially "partially shut down" for the 11th time in modern history. The failure of the two parties to pass a new budget bill has forced hundreds of thousands of civil servants into unpaid leave and caused a wave of instability spreading across the markets.

The market reaction was almost instantaneous: futures for major indexes like the S&P 500 and Dow Jones Industrial Average were all in the red. Investors, worried about the prospect of the US economy losing about $15 billion in GDP per week, began looking for safe havens. The price of gold, the traditional hedge, soared to a record high of nearly $3,890 an ounce.

But the focus was on another asset. Amid the chaos, bitcoin (BTC) made a spectacular breakout, rising more than 4% in 24 hours to approach the $118,000 mark, according to data from CoinMarketCap.

As of 11 p.m. on October 2 (Vietnam time), the price of bitcoin had reached $120,000, less than 4% away from the historical peak of $124,128 set on August 14.

This move, in stark contrast to the stock market, has strongly reinforced the argument that bitcoin is gradually separating itself from traditional risk assets.

But before investors rush to celebrate, history offers a warning. Is this rally sustainable, or will the ghost of the 2018 shutdown return?

Ghost of 2018

For those who have been following the market closely, the current scenario brings back memories of the record-breaking 35-day government shutdown under President Trump (December 2018 to January 2019). Back then, bitcoin’s initial reaction was also promising. In the first few days, BTC rose from below $3,900 to over $4,200.

But the joy was short-lived. As the political stalemate dragged on, the negative macroeconomic effects began to sink in. Bitcoin reversed course and plummeted. By the time the government reopened, its value had lost about 10%, falling below $3,600.

The story of 2018 is a stark reminder that political instability can be a double-edged sword. Initially, it drives capital into decentralized, non-state assets like bitcoin. But over time, it weakens economic growth, stifles spending and drives investors away from all perceived risk assets, including cryptocurrencies.

So what's different this time? The answer lies in the underlying forces that are quietly reshaping the game.

Amid the chaos and uncertainty following the US government shutdown, bitcoin not only did not collapse but also exploded strongly, approaching its historical peak (Photo: CryptoSlate).

More than just a one-time effect: Foundational nudges

Bitcoin’s rise this time around is not simply a reaction to the government shutdown. It is backed by a series of positive structural factors that indicate the market is maturing.

Unexpected "gift" from the Internal Revenue Service (IRS)

One of the biggest boosts came from an unlikely source: the US Internal Revenue Service. The IRS recently ruled that companies will not have to count unrealized gains from bitcoin holdings against the 15% Corporate Minimum Tax (CAMT).

This is incredibly important news. It removes a potentially huge tax burden for public companies holding bitcoin as a reserve asset.

Analysts say the IRS move will pave the way for more businesses to feel more confident about putting bitcoin on their balance sheets, making it a more legitimate and transparent reserve asset, thereby reducing circulating supply and reinforcing its long-term scarcity value.

Big money flows constantly

While 2018 was largely driven by retail investors, 2025 saw the participation of large institutions. Data shows that spot bitcoin ETFs recorded a net inflow of $430 million in just one day, showing strong confidence from professional investors.

In addition, the “whales” in the market also took action. Tether, the world’s largest stablecoin issuer, confirmed that it had purchased another $1 billion in bitcoin, continuing its long-term accumulation strategy. Each purchase of such a large volume puts more pressure on the already limited supply (only 21 million BTC), pushing up the intrinsic value of this currency.

Expectations of loose monetary policy

The government shutdown coincided with the release of disappointing employment data. The ADP report showed that the US private sector lost 32,000 jobs in September. The weak economic data raised expectations that the Federal Reserve may have to cut interest rates to support the economy, possibly as early as its meeting in late October.

A lower interest rate environment typically increases the appeal of non-yielding assets like gold and bitcoin.

The two-horse race for gold

Bitcoin is not alone in the turmoil. Gold, the traditional safe haven, has also surged to a new record high of nearly $3,890 an ounce, reflecting a larger trend: money is fleeing the fiat system and assets that depend on government stability.

However, the race between “digital gold” and real gold is still very much alive. Gold has outperformed the market so far this year, gaining 45% compared to just 20% for bitcoin. This is because larger, more conservative investors like central banks and pension funds still favor gold for its liquidity, history, and regulatory recognition. Bitcoin, despite its maturity, still behaves more like a high-risk tech stock.

Ironically, the government shutdown itself has created a roadblock for bitcoin. The US Securities and Exchange Commission (SEC), the agency that approves major financial products, has had to lay off about 90% of its staff.

This means that the review and approval process for the much-awaited spot cryptocurrency exchange-traded funds (ETFs) will be delayed indefinitely. “The Cryptober ETF is probably going to be on hold for a while,” analyst Nate Geraci commented sourly. This delay could dampen the market’s excitement in the short term.

The 2025 US government shutdown appears to have acted as a catalyst, a stress test for financial markets, and bitcoin has passed it with flying colors. However, it would be wrong to attribute this to the price surge alone.

This surge is built on a much stronger foundation than 2018: tax clarity, massive institutional capital inflows, and a macro environment increasingly favorable to alternative assets. The events in Washington were just the spark that ignited a fire that was already smoldering.

Whether bitcoin can sustain its rally after the political turmoil subsides remains to be seen. But one thing is certain: in a crisis of confidence in the traditional system, bitcoin is proving to be more than just a speculative asset, evolving into a key pillar of a 21st-century portfolio.

Source: https://dantri.com.vn/kinh-doanh/chinh-phu-my-dong-cua-bitcoin-but-pha-ap-sat-dinh-lich-su-20251002232923188.htm