US Government Shutdown & Impact on Bitcoin - 2013 vs 2018?

[gta3uzi]

The POTUS has indicated that he is willing to shut down the US federal government over a contentious policy element on December 21st, 2018.

In 2013 the US federal government was shut down for roughly two weeks over a funding dispute related to the Affordable Care Act. This occurred from October 1st to October 17th.

https://en.wikipedia.org/wiki/United_States_federal_government_shutdown_of_2013

We also saw a significant bull run that started almost immediately after October 1st, 2013 and peaked around December 1st of that same year.

The question is - are these events coincidental? Typically I ascribe a risk-off attitude towards Bitcoin. I.e. if the stock market crashes I think people will flee to things like treasuries, cash, and high-grade bonds. In the event of a federal shutdown I'm not sure that Bitcoin doesn't necessarily become a hedge against governmental uncertainty.

What are your thoughts?

Edit: Fun tidbit - the debt ceiling is currently suspended until March 1st, 2019. POTUS signed the suspension on September 8th, 2017.

[Wilhelm]

Humans see patterns and want a reason for everything.
America is not the center of the world.

I do not see any relation between the two.
It's not like they go trade Bitcoin to finance the government or something.

[exstasie]

The POTUS has indicated that he is willing to shut down the US federal government over a contentious policy element on December 21st, 2018.

In 2013 the US federal government was shut down for roughly two weeks over a funding dispute related to the Affordable Care Act. This occurred from October 1st to October 17th.

https://en.wikipedia.org/wiki/United_States_federal_government_shutdown_of_2013

We also saw a significant bull run that started almost immediately after October 1st, 2013 and peaked around December 1st of that same year.

The question is - are these events coincidental? Typically I ascribe a risk-off attitude towards Bitcoin. I.e. if the stock market crashes I think people will flee to things like treasuries, cash, and high-grade bonds. In the event of a federal shutdown I'm not sure that Bitcoin doesn't necessarily become a hedge against governmental uncertainty.

What are your thoughts?

They're coincidental. Technical traders were already predicting a bubble well before that happened. I'd say the shutdown of Silk Road (which happened around the same time, directly before the bubble went parabolic) was much more significant for the Bitcoin market.

The threats of government shutdown are always a big spectacle. It's always much ado about nothing.

[dothebeats]

I don't see any solid link between the two, and the run in 2013 was something that was perpetrated by a bot, and traders just went on and played the fire until it peaked December of the same year. Also, i don't think there were that much people concerned on the shutdown of the Fed government that were involved in bitcoin in 2013 too, so it's hard to draw a line correlating the 2013 ATH and the fed gov't shutdown.

I'd say the shutdown of Silk Road (which happened around the same time, directly before the bubble went parabolic) was much more significant for the Bitcoin market.

Knowing that during this time, bitcoin is a widely-used currency on Silk Road makes a much more appealing correlation to the 2013 ATH. Governmental uncertainty would play a vital role in today's market, but back in 2013? I don't think so.

[andohyeb]

This decision can not have the overall effect on bitcoin prices but other factors might account for impact on bitcoins price. There isn't any interdepencies between us government shutdown and its effect on bitcoin price.                                             

[figmentofmyass]

The POTUS has indicated that he is willing to shut down the US federal government over a contentious policy element on December 21st, 2018.

In 2013 the US federal government was shut down for roughly two weeks over a funding dispute related to the Affordable Care Act. This occurred from October 1st to October 17th.

https://en.wikipedia.org/wiki/United_States_federal_government_shutdown_of_2013

We also saw a significant bull run that started almost immediately after October 1st, 2013 and peaked around December 1st of that same year.

The question is - are these events coincidental? Typically I ascribe a risk-off attitude towards Bitcoin. I.e. if the stock market crashes I think people will flee to things like treasuries, cash, and high-grade bonds. In the event of a federal shutdown I'm not sure that Bitcoin doesn't necessarily become a hedge against governmental uncertainty.

i believe it was a coincidence---same as the narrative about the 2013 cyprus bailout. i also don't think these periodic government shutdowns are a big deal. they've always been resolved in fairly short order. it's all just a big dog-and-pony show.

if a real financial crisis struck tomorrow and we entered a major recession, i don't think bitcoin would act as a hedge. even hedge assets fall in that context---see gold during the 2008 financial crisis. and i don't think the market perceives bitcoin as a hedge like gold either.

[Pursuer]

The question is - are these events coincidental?

this could have been a valid discussion about the reasons of 2013 bubble if we already didn't know the reason. but we do know them. it was due to increase in mining activity thanks to ASICs and the high profitability of it accompanied by the manipulation of MtGox which was mostly their exit scam to earn a lot of money by pumping bitcoin with their fake bots and they succeeded because they were controlling more than 85% of the total market volume at the time.

[davis196]

The question is - are these events coincidental?

this could have been a valid discussion about the reasons of 2013 bubble if we already didn't know the reason. but we do know them. it was due to increase in mining activity thanks to ASICs and the high profitability of it accompanied by the manipulation of MtGox which was mostly their exit scam to earn a lot of money by pumping bitcoin with their fake bots and they succeeded because they were controlling more than 85% of the total market volume at the time.

I agree with that,but I would like to add something.
Why would a government shutdown cause panic amongst the americans?
If they ever panic,why would they buy bitcoin?
The government shutdown is just delaying some government payments for a future time,but the US government always pays it's debts(even with printed money and debt).So why would somebody panic?
That doesn't make any sense.

[arpon11]

Humans see patterns and want a reason for everything.
America is not the center of the world.

I do not see any relation between the two.
It's not like they go trade Bitcoin to finance the government or something.

I agree with you "America is not the center of the world " the market may react to what the op said but I think the cryptocurrencies market is bigger than that.  I could remember when I read somewhere online that "the major reason why cryptocurrencies and bitcoin in particular was developed is to break the power of governments especially the USA dollars over others economic" but that has been disproved by the way things are going.  If USD is shutdown bitcoin can only benefit from those that will like to hedge USD with bitcoin ! like wise other form of money like: gpb, yen and Eur.

[cellard]

Humans see patterns and want a reason for everything.
America is not the center of the world.

I do not see any relation between the two.
It's not like they go trade Bitcoin to finance the government or something.

Pattern formation bias runs wild in markets, but I believe it could have played a role. The exact % is impossible to know. There are too many variables involved. However on my fundamental analysis, anything that reduces certainty in a government raises bullish consensus on neutral assets like metals and Bitcoin, thats why I think it may have had an impact in fueling the rocket.

[buwaytress]

And all this also in the background of POTUS's supposed hearing before the 31 December deadline, among many other hearings. He'll probably want to suspend everything and postpone whatever he can - he has executive powers after all. All this is bound to impact the US economy, budgets, jobs, etc. But will that spillover to Bitcoin? Probably, since there's still so much sway from US money. But if US dollar continues to weaken, would be long term pressure and that could translate to stronger alternative currencies. Bitcoin the likely candidate to benefit.

[hatshepsut93]

The question is - are these events coincidental? Typically I ascribe a risk-off attitude towards Bitcoin. I.e. if the stock market crashes I think people will flee to things like treasuries, cash, and high-grade bonds. In the event of a federal shutdown I'm not sure that Bitcoin doesn't necessarily become a hedge against governmental uncertainty.

What are your thoughts?

Edit: Fun tidbit - the debt ceiling is currently suspended until March 1st, 2019. POTUS signed the suspension on September 8th, 2017.

Yes, it's just a coincidence. Bitcoin has it's own market cycles, it's clear now when we have 10 years of trading history, there's no point in trying to tie some political events to Bitcoin price movements. Like, negative stuff happens all the time - the world is full of wars, political conflicts, protests, economical disasters and so on - yet Bitcoin is not going up every day continuously. In the same manner, it's wrong to try to explain bear trends with some sort of outside influence.

[STT]

There is disparity, USA is not the centre but in Finance and as a world reserve currency then yes it is the centre of the capitalist system.   Since communism has largely failed and no other system of exchange has proved as productive then for the moment US dollar is very important.
It was argued from the start that not just one country should be a backing for a global system, hence it was based around gold supposedly but at present its just wandering around the stony road that is egotistical politics and policies of the western system.   Bias is clear and the world is impacted and impeded by that lopsided trade, most obviously we see large build ups in debt and imbalance is apparent

This is where it comes round to that shut down 'idea'

US federal government was shut down for roughly two weeks

Well I dont think it did, government carried on.   What happened was further spending especially on a deficit budget was restricted.    What really happens is they just slow down the process of burning money.     Its not an emergency its more of a inconvenient reality, government eventually must run a surplus and repay its debts.

Because the global reserve system is biased and a very wonky 70 year old system that failed partially sometime in the 70's but continues to favour some over others it allows the debts to build up.    Its not really a coincidence that instability would relate to this stress point of failure in the system.   BTC itself originated after 2008 as an idea, working concept then the current network of exchange we have.    Its a surprise to everyone that somehow it relates to and possibly eases this global system of exchange even if it were only in a light way for online transactions though people seem to use it for many types of business

Its actually a positive if government 'shuts down'    Its the start of it repaying debt, running a balanced and surplus budget to not require approval for further borrowing.   The ceiling is there for a good reason, the answer to this question might be to read the origin of the ceiling and decide from there

[cryptocrusher]

It would take a brave person to back this with any conviction. It seems just like a pure coincidence. Perhaps even the market was ready to go bullish but the shutdown and the slightest investment from one person was enough of a trigger for it. I do not think that if the market was bearish that this would ever act as a trigger for a bullish reversal.

[magneto]

I don't see any real connections between the two events.

Bitcoin was due for a rebound anyways in the short term, even if there was no actual bullish breakout. I think that this current short term bullish trend would have happened regardless of a potential government shutdown.

Also, the 2013 shutdown was in October, while the height of the bubble was in fact in November and December. I think it's a bit of a stretch to say that these events were correlated at all.

While bitcoin could potentially continue to test the $4k resistance, it's got nothing to do with US government shutdowns. There is no fundamental reasons that are able to back this argument up, in my opinion. It's also more likely that the price continues to move sideways and dip, as I expect the bear market to continue for at least a few more weeks.