As a historic U.S. government shutdown seems imminent, cryptocurrency market observers are preparing for price volatility.

As of the time of writing, the U.S. government is technically still in a shutdown, but a temporary funding bill that would extend funding for key government services until January has been submitted from the Senate to the House.

This shutdown has affected several important federal functions, including the ability of securities and commodities regulatory agencies to approve the listing of crypto assets. Legislative work has also stalled, and the likelihood of passing a crypto framework bill before the end of the year is diminishing.

The last time the government shut down, Bitcoin's price surged significantly. However, the current environment is markedly different, with the crypto market facing broader headwinds.

This current round of U.S. government shutdown has entered its 43rd day, making it the longest in the country's history. The previous record was 35 days, which also occurred during President Trump's first term.

When Congress cannot reach an agreement on a funding resolution, a government shutdown occurs. The result is that the government effectively has no budget, and many critical activities cannot continue. This includes welfare programs like food assistance for struggling families and even paying salaries for key positions such as air traffic controllers.

For the crypto industry, this means that agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) can only operate at a minimal level. The SEC is unable to make decisions on various crypto-related applications, such as exchange-traded fund (ETF) applications.

The economic impact cannot be overlooked. Greg Daco, chief economist at consulting firm EY-Parthenon, stated, "There will be noticeable and permanent losses in economic activity due to the government shutdown."

However, the mainstream cryptocurrency market, including Bitcoin, has been relatively less affected. This was also the case during the shutdown in Trump's first term from 2018 to 2019.

At that time, Bitcoin's price did drop by about 16%, from around $4,200 to $3,500. But after the government reopened, Bitcoin's price skyrocketed, reaching $13,000 in just five months, nearly a 300% increase.

Nearly seven years later, Bitcoin has dropped over 12% during the shutdown, although the decline is smaller. Bitcoin's price at the start of the shutdown was around $120,000, and it is currently trading close to $105,000.

Analysts are now focused on whether the crypto market will see a new bull run once Washington reopens. According to Ben Lilly, an analyst at JLabs Digital and Browns Research, "There are some peripheral catalysts that could provide strong tailwinds for the digital asset market."

"These catalysts include the Federal Reserve potentially lowering interest rates, with a current 67% probability of a 25 basis point cut; the Treasury General Account (TGA) injecting liquidity into the market after the shutdown ends; the planned termination of quantitative tightening by the Federal Reserve in December; and the fact that the crypto market has not seen significant gains in 2025, so we might see institutions positioning for 2026 in December rather than taking profits like last year due to tax season," he said.

However, Lilly also noted that this shutdown "has thrown cold water on the crypto market," leading to "loss of momentum, causing digital assets to miss out on much of the gains realized by the stock market."

Nic Puckrin, co-founder of The Coin Bureau and a crypto analyst, also holds a cautious view on the market after the shutdown:

"History does not repeat itself exactly, but there are always similarities. The massive revenue generated from tariffs imposed earlier this year led Trump to announce $2,000 stimulus checks for the American public."

During the economic crisis following the outbreak of COVID-19, Trump also issued $1,200 economic stimulus checks to Americans, which caused cryptocurrency prices to surge.

As pointed out by the anonymous account Ash Crypto on platform X, "The last time this happened, it ignited the bull market of 2021, with Bitcoin soaring from $3,800 to $69,000."

The Kobeissi Letter, a global market communications firm, stated that considering the expectations of interest rate cuts, historical highs, and the combination of stimulus checks, they expect prices to rise significantly: "Buckle up."

However, for platforms like Robinhood, which set trading volume records as users invested their stimulus checks in stocks and cryptocurrencies, it is still too early to celebrate.

First, it is unclear whether these subsidies will ultimately materialize and in what form. Trump stated that low-income and middle-class Americans would be eligible, but did not specify the income criteria. He also promised that any leftover funds would be used to pay down the massive national debt.

Second, Trump's tariff policies are currently facing intense legal scrutiny from the Supreme Court, which is ruling on their legality. The Constitution grants the power to tax to Congress, and over the past year, Trump has imposed new taxes on imported goods without legislative approval or comment. If the court rules against Trump, it would significantly undermine his key economic policy pillar and his ability to distribute tariff revenue in the form of subsidies.

While there are many similarities between the factors affecting the crypto industry during the 2019 shutdown and the current one, key indicators such as interest rates and further political turmoil within Trump's administration make the outlook for a bull market highly uncertain.

Related: The community expects the first U.S. spot XRP ETF to launch on Thursday.

Original article: “Bitcoin (BTC) Price Surge After U.S. Government Shutdown Is Not Guaranteed—Here’s Why”

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