U.S. Government Shutdown Rekindles 2018 Parallels as Bitcoin Tests Support, Gold Hits Record
The ongoing U.S. government shutdown has stalled economic data releases, leaving markets without key guidance and amplifying uncertainty across risk assets. The situation has prompted traders to look back at how markets reacted during previous shutdowns — notably the 2018–2019 episode, which coincided with Bitcoin’s bear market bottom.
That 35-day shutdown, running from Dec. 22, 2018, to Jan. 25, 2019, overlapped with Bitcoin’s sharp drop from $6,000 to just above $3,000, marking the final capitulation phase of that market cycle. The bottom was reached in mid-December, followed by a strong rebound once the government reopened, resulting in seven consecutive weeks of gains that lifted BTC above $5,000 by April 2019.
While there’s no clear causal link between fiscal gridlock and crypto cycles, the historical overlap highlights how periods of macro uncertainty can coincide with turning points in sentiment. Since the latest shutdown began, Bitcoin has slipped around 1%, in line with broader weakness across equity markets — the Nasdaq Composite is also down roughly 1%.
Market Shakeout Clears Excess Leverage
Friday’s crypto crash triggered the largest liquidation event on record, wiping out about $20 billion in leveraged futures positions tied to Bitcoin, Ether, and major altcoins.
BTC briefly plunged to $107,000 on Coinbase, its lowest level since July, before recovering. Other exchanges recorded even deeper intraday lows.
According to CoinMetrics, the wipeout was less a crisis than a healthy reset:
“The great de-leveraging was a stress event rather than a systemic failure. It flushed out excess leverage and leaves the market on a firmer footing,” the analytics firm said.
The event has drawn parallels to earlier “washouts” that historically preceded stronger recovery phases for digital assets.
Gold’s Rally Adds Bullish Undercurrent for Bitcoin
Amid fiscal turmoil, investors are turning toward hard assets, with gold prices surging to a record $4,200 per ounce — up 61% year-to-date and 10% since the shutdown began. Silver, palladium, and platinum have also posted steep gains.
Analysts note that Bitcoin typically lags gold’s uptrend. Joe Consorti estimates BTC’s moves tend to trail gold by roughly 100 days, and JPMorgan’s volatility-adjusted model suggests this correlation could support a fair value near $165,000 by year-end if current dynamics hold.
Reset May Lay Groundwork for Recovery
Despite short-term pain, the combination of a historic leverage flush, record gold prices, and growing expectations for Fed rate cuts could offer a more sustainable base for Bitcoin’s next leg higher.
Much like 2018, the present period of stress and uncertainty may ultimately mark the beginning of a new bullish phase — one built on cleaner positioning and stronger market fundamentals.
