Stop it! Shutdown? Stop it!! Why does the shutdown cause BTC to fall, and when will the shutdown end?? What are the consequences of shutdowns in history?? Now the game of the market has begun to move towards the lockout, especially this week's decline is basically related to the lockout. With the Senate's 14th rejection of the House version of the "Provisional Appropriations" (CR), the lockout time of the U.S. government has set a new historical record. The longest lockout time in history is 35 days, which was generated in Trump's first term. Now it is the 36th day, and when the lockout will end is completely unexpected. The longer the shutdown lasts, the more obvious the gap effect on the fiscal side becomes. Government wages and contract payments are delayed, and cash flow is transmitted to the market level through residents and businesses. Non essential consumption is usually the first to be under pressure. At the same time, the uncertainty of official data releases has raised the volatility premium, and the market has shifted from data-driven to expectation driven, with more frequent emotional bands during the day. The direct impact is that Trump will not continue to issue food voucher relief funds until the government reopens, which may increase social unrest. The data from the Bureau of Labor Statistics will not be released until the end of the government shutdown. The Ministry of Transportation warns that if the shutdown continues and there is a continued shortage of air traffic controllers, some airspace may be forced to close or flow restrictions may be imposed next week. For the market, the impact is gradually accumulating in a pessimistic direction. The interruption of macroeconomic data means that the Federal Reserve and the market lack new economic information and can only use emotions and speculation to price, leading to an increase in short-term volatility. The combination of fiscal shutdown and pressure on people's livelihoods will weaken consumer expectations, pose potential pressure on the service industry and retail chain, and some regulatory agencies will enter the lowest operating mode. The pace of new issuance and approval will slow down, and front-end transactions in the capital market will be normal while back-end audits will be restricted. More importantly, the longer the shutdown time, the more pronounced the marginal tightening effect on financial conditions, and investors will be concerned about fiscal execution risks and policy uncertainty. Cash demand will increase, and safe haven assets (short-term bonds, US dollars) will benefit in the short term, while the sentiment between growth assets and high beta sectors will be more fragile. Due to the long-term shutdown being equivalent to a short-term fiscal tightening, the market has turned to betting on whether monetary policy will become more dovish, playing with expectations of lower interest rates and liquidity replenishment. However, in reality, Powell's remarks are completely opposite to current market expectations, leading to pessimism among investors. Because the Ministry of Finance often speeds up the issuance of treasury bond and raises the TGA in order to make up for the gap, and funds are drawn from overnight repo or the banking system, which will affect the price changes in the risk market. So once the shutdown ends and temporary funding is implemented, the first thing that happens is the relief of negative sentiment, and uncertainty begins to dissipate. The typical path for the market should be to first repair emotions and then see funds replenish. However, this is not a headache. From historical data, the US government was shut down for 21 days from 1995 to 1996, and the S&P rose by about 4.0% in the month after the shutdown. In 2013, the US government was shut down for 17 days, and then rose by about 4.5% in a month. From 2018 to 2019, the record breaking 35 day shutdown ended, and the S&P rose by 5% in the month after the shutdown ended. These historical data all tell us that once the shutdown ends, the probability of market rebound will be very high. Overall, since the end of six major US shutdowns in 1990, the S&P has risen by an average of 1% to 4% in one month and 3% to 7% in three months. This is mainly due to the easing of uncertainty after the shutdowns and fiscal inflows, driving funds from overnight repurchases or bank side replenishments, amplifying the rhythm of emotions before funds. The current situation is actually very similar to 2013, when after the shutdown period ended, S&P achieved a price rebound of over 4% within one month. Subsequently, with the recovery of fiscal payments, the slowdown of net bill supply, and the decline in risk premium, the three-month dimension continued to rise. To put it simply, the current decline is a combination of multiple factors, which may include market panic about Powell's hawkish stance not cutting interest rates, or the withdrawal of market liquidity from the US government shutdown. However, the shutdown has now exceeded the longest period in history, and I believe the shutdown time will not be very long in the future. And once the shutdown ends, from a historical perspective, almost everything that has been missed is the recovery of the risk market, and there is no systemic risk in the risk market now. I believe that the probability of a correction in the decline of the US stock market will be very high, and the correlation between cryptocurrencies, especially BTC, and technology stocks is still strong. It is also very likely that Bitcoin will rebound during the correction of technology stocks. When is the earliest possible end to the shutdown? Although there is no clear timeline, based on current public information, if the cross party negotiations in the Senate go smoothly and some Democrats join in to support, allowing the Republican Party to reach 60 votes in favor of closing the debate, the funding bill can enter the final voting process. There are indications that the centrists of the two parties are privately communicating, so theoretically there may be a breakthrough this week. If the framework is reached, the Senate can complete a procedural vote within 1 to 2 days, the House will then proceed with the vote, and the executive branch will gradually resume operations within 1 to 3 working days after the President signs it. However, there are significant practical constraints, and both sides still need to reach consensus on issues such as expenditure scale and policy conditions (including medical insurance subsidies). Coordination between the Senate procedural arrangements and the House of Representatives is also crucial. If negotiations are stuck on fiscal terms or political conditions, the shutdown may last for weeks or even longer. Therefore, the most optimistic scenario is to reach an agreement this week and resume work next week. If it can really be achieved, it will be of great help in repairing investors' emotions, after all, the current decline is mainly due to concerns about the continued extension of the shutdown, which will put pressure on society, the economy, and production. This article is sponsored by @ Bitget | Save the most transaction fees, receive the most gifts, and become a VIP on Bitget