The recent rise in the value of Bitcoin has raised concerns, as analysts pointed to the upcoming closure of the U.S. government as a potential trigger.
Political gridlock in Washington is pushing investors to seek alternatives as markets brace for any potential disruption.
The risks of closure convert capital into cryptocurrencies
Data indicates that the price of Bitcoin rose by about 4.2% in late September, a move that Nasdaq attributed to increasing fears of a government shutdown that could delay economic reports and weaken confidence in financial stability in the United States.
The iShares Bitcoin Trust ETF mirrored this rise, increasing by 4.9% on September 29. According to Nasdaq, this rise is an indicator of the optimism surrounding cryptocurrencies extending to regulated investment products. At the same time, broader financial markets are experiencing strong movements, as the S&P 500 and Nasdaq indices have risen, with traders comparing the risks of a shutdown to federal policy. Analysts have also recently highlighted the rise in gold prices due to a weaker dollar, among other factors, which collectively point to a shift towards safe-haven assets.
The Council on Foreign Relations stated that the growth of digital assets poses a challenge to governments and central banks. As a result, Bitcoin may attract increasing inflows as traders seek alternatives to traditional markets in the event of a worsening political crisis.
