By Frances Yue

The U.S. federal government is on the brink of a partial shutdown if Congress fails to pass necessary funding legislation by Sunday morning.

The Potential Benefits for Bitcoin

In light of this, industry insiders have weighed in on how such a shutdown could affect the cryptocurrency market. David Tawil, president and co-founder of ProChain Capital, believes that a government shutdown could actually be a positive development for Bitcoin. He argues that the dysfunctionality and incompetence displayed by sovereign governments during a shutdown would further erode trust in fiat currency, ultimately leading to increased interest in Bitcoin as a non-sovereign store of value. This narrative aligns with the long-standing belief held by Bitcoin supporters who view the cryptocurrency as a potential hedge against the existing monetary system. In fact, during March of this year, Bitcoin rose by over 23% in response to the banking crisis in the U.S.

The Potential Impact on Bitcoin's Price

The extent of the boost that Bitcoin could receive from a government shutdown depends on both its duration and severity. Tawil suggests that if the shutdown were to last for a couple of weeks, Bitcoin could potentially surge to at least $35,000. However, it's worth noting that while Bitcoin has rallied approximately 60% in value this year, it is still down more than 60% from its all-time high in 2021, based on CoinDesk data.

Varying Opinions on the Price Increase

Tal Cohen, managing director at Kraken USA, shares Tawil's view that a government shutdown may play out favorably for Bitcoin. However, he is less convinced about the magnitude of the price increase. According to Cohen, Bitcoin reaching $35,000 seems unlikely due to the limited supply and demand dynamics that would not be significantly altered by a government shutdown.

With the clock ticking, it remains to be seen whether Congress can prevent the partial shutdown. Whatever the outcome, the crypto community will be closely watching to see how Bitcoin fares in these uncertain times.

Stand with Crypto Day

Crypto entrepreneurs from across the U.S. recently gathered in Washington D.C. to advocate for legislation that could provide much-needed regulatory clarity for the industry. Coinbase CEO Brian Armstrong led the charge, with the goal of convincing lawmakers to consider bipartisan legislation passed earlier this year. The proposed legislation aims to establish a new regulatory framework for digital assets, enabling crypto companies to operate in a more compliant manner. To raise awareness about the importance of crypto, Coinbase organized an event called "Stand with Crypto Day," which took place on Wednesday.

During this event, an oversight hearing was also being held at the House Financial Services Committee. SEC Chair Gary Gensler reinforced the need for all crypto companies to adhere strictly to U.S. securities laws. While some Republicans argued that the SEC's disclosure rules were designed for traditional markets and may not be suitable for crypto, the issue remains a point of contention.

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Ether futures ETF

VanEck has announced its readiness to launch an exchange-traded fund (ETF) that invests in ether futures. The ETF, known as VanEck Ethereum Strategy ETF, will be listed on CBOE and actively managed by Greg Krenzer, head of active trading for VanEck. Although the specific launch date has not been specified, there is speculation that the SEC may approve multiple Ethereum futures ETFs in the near future, as it has already approved several ETFs investing in bitcoin futures.

Crypto in a snap

According to CoinDesk data, Bitcoin experienced a 1.2% decrease in value over the past week and was trading at approximately $27,111 on Thursday. On the other hand, Ether saw a 1.2% gain during the same period, reaching around $1,657.

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