Bitcoin News Today: Government Gridlock Fuels Bitcoin's Safe-Haven Surge to $116K

The U.S. government shutdown, now in its first week of 2025, has reignited historical parallels between political uncertainty and Bitcoin's market cycles. With Bitcoin surging 2.9% to $116,427 amid the shutdown, a Cointelegraph report says analysts are drawing comparisons to past government closures that coincided with cryptocurrency market bottoms. The 2018 shutdown, for instance, overlapped with Bitcoin's steepest bear market, during which prices plummeted over 70% from their $20,000 peak, a Coindesk report notes. This time, however, the narrative is shifting: Bitcoin's resilience amid political gridlock has sparked speculation that the current market may be nearing a turning point.

The 2025 shutdown, triggered by partisan disputes over a continuing resolution funding bill, has seen investors flock to safe-haven assets like Bitcoin and gold, according to a CoinCentral analysis. This mirrors 2013 and 2019 shutdowns, when Bitcoin outperformed traditional markets. During the 2013 shutdown, stocks fell while Bitcoin rallied, and the 2019 event saw both equities and Bitcoin decline before recovering, as reported by Cointelegraph. Ryan Lee of Bitget notes that government shutdowns often lead to dovish Federal Reserve policies, boosting Bitcoin's appeal as an alternative to politically sensitive assets, CoinCentral adds. Historical data from the Kobeissi Letter suggests the S&P 500 has averaged a 13% annual gain following past shutdowns, a trend that could benefit risk assets like Bitcoin, Cointelegraph reported.

Bitcoin's recent volatility, however, has been driven by leverage-related crashes rather than macroeconomic factors. Last week's $200 billion crypto market plunge—triggered by Trump's 100% tariff threats on Chinese imports—exposed the fragility of leveraged positions. Over $19 billion in long positions were liquidated within 24 hours, wiping out 1.6 million traders, according to a 247WallSt report. This "leverage flush" has reset open interest to July levels, with Bitcoin's price stabilizing above $112,000 as short-term support, per a Coindesk analysis. Analysts like Vetle Lunde of K33 argue the deleveraging creates a "constructive setup" for accumulation, particularly as institutional demand and ETF expectations remain strong, the Coindesk piece adds.

The cryptocurrency's role as a hedge against inflation and geopolitical risk is also gaining traction. Bitcoin's correlation with gold has climbed to 0.85, a level not seen since April 2024, according to a Cointelegraph piece. Gold's all-time high of $4,179.48 per ounce and Bitcoin's safe-haven appeal reflect growing demand for assets insulated from central bank devaluation, the report notes. Andrei Grachev of DWF Labs likens Bitcoin's trajectory to gold's historical transition from currency to store of value, noting both assets now serve similar purposes in diversified portfolios.

While the current market environment remains volatile, the confluence of a government shutdown, leveraged position resets, and Bitcoin's strengthening safe-haven narrative has created a complex backdrop. Traders on prediction markets assign a 38% probability of the shutdown ending by October 15, CoinCentral estimates, but political divisions show no immediate signs of resolution. For Bitcoin, the path forward hinges on whether the recent deleveraging will foster a sustainable bull run or merely delay the next bear market.