With the U.S. government potentially heading towards a partial shutdown, there are speculations on how this could impact the cryptocurrency market. According to industry participants, a government shutdown could potentially benefit Bitcoin and other cryptocurrencies.
David Tawil, the president and co-founder of ProChain Capital, suggests that a government shutdown could lead to negative sentiment towards sovereign governments and their fiat currencies. This could further boost the narrative that cryptocurrencies like Bitcoin are a non-sovereign store of value and a hedge against the existing monetary system. Tawil points out that Bitcoin saw a 23% increase in March when the United States was experiencing a banking crisis.
Tawil also suggests that the extent of the boost for Bitcoin would depend on the duration and severity of the government shutdown. He speculates that if the shutdown were to last a couple of weeks, Bitcoin could potentially reach at least $35,000. It’s important to note that Bitcoin has had a volatile year, rallying almost 60% but still down over 60% from its all-time high in 2021.
Tal Cohen, the managing director at Kraken USA, shares a similar sentiment but is less bullish on the potential price increase. Cohen believes that for Bitcoin to reach extreme heights, there would need to be a dramatic change in supply and demand, which is unlikely to happen due to the government shutdown.
In other cryptocurrency news, crypto entrepreneurs gathered in Washington D.C. recently to lobby lawmakers for legislation that could bring regulatory certainty to the industry. The event, called “Stand with Crypto Day,” aimed to raise awareness and garner support for bipartisan legislation that would create a new regulatory framework for digital assets. This framework would provide less burdensome paths for crypto companies to comply with regulations.
Coinbase CEO Brian Armstrong led the charge in urging lawmakers to consider the legislation that had previously been passed by the Republican-led House Financial Services Committee and House Committee on Agriculture. The hope is that these efforts will lead to a more favorable regulatory environment for cryptocurrencies in the United States.
Additionally, VanEck announced its readiness to launch an exchange-traded fund (ETF) that invests in ether futures. The ETF, called VanEck Ethereum Strategy ETF, will be actively managed by Greg Krenzer and listed on CBOE. This move comes as the Securities and Exchange Commission (SEC) has yet to approve any ether futures ETFs, despite approving several bitcoin futures ETFs.
In summary, the potential U.S. government shutdown could have both positive and negative implications for the cryptocurrency market. Some believe it could be beneficial for Bitcoin, while others are more cautious about predicting a significant price increase. Meanwhile, efforts are underway to lobby for favorable regulations that would bring greater clarity to the crypto industry. The launch of an ether futures ETF by VanEck further highlights the growing interest and potential for cryptocurrencies in traditional financial markets.