Bitcoin and other major cryptocurrencies gained ground this week as mounting concerns over a U.S. government shutdown injected volatility into traditional markets, underscoring crypto’s evolving role as both a risk asset and, at times, a hedge against policy uncertainty.

Uncertainty Breeds Divergence

Historically, crypto’s reaction to fiscal standoffs has been mixed. During the 2018–2019 shutdown, Bitcoin fell roughly 9%, while in earlier episodes it showed resilience. This time, some market participants are treating digital assets as an alternative refuge, particularly as questions mount over the U.S. dollar’s near-term trajectory.

Policy & Regulatory Implications

The shutdown also carries direct implications for crypto regulation. Agencies such as the Securities and Exchange Commission and the Commodity Futures Trading Commission are operating with reduced staff, delaying decisions on pending exchange-traded fund applications and enforcement actions. Any prolonged disruption could push back timelines for crypto-related approvals, even as market demand for regulated products builds.

Credit concerns add another layer. Scope Ratings warned the shutdown could weigh on the U.S. sovereign rating, echoing past episodes when political brinkmanship eroded confidence in America’s fiscal management. Such warnings often ripple across global markets, with unpredictable effects on digital assets.

Short-Term vs Long-Term Scenarios

Analysts caution that the latest rally may not be durable if the shutdown drags on. In the short term, uncertainty tends to drive correlations higher, meaning crypto could sell off alongside equities in a broader risk-off move. Yet in longer scenarios where faith in U.S. governance is dented, some investors see potential for Bitcoin to benefit as a hedge against systemic dysfunction.

Bitcoin (BTC) Eyes Fresh Highs After Steady Climb

Source: TradingView

BTC trades between 108,815 and 115,589 after rising almost 5% in a week, close to 9% in a month and more than 41% in six months. The short-term average stands near 118,596 and the longer one near 113,925, showing the trend is still up even if price sits just under the first line. A break above 118,919 could send the coin toward 125,693, about 9% higher, while solid backing waits at 105,372 and deeper cover near 98,599. Momentum signals stay positive but hover

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Author: Crypto Daily