The U.S. government shutdown has dominated headlines, yet Bitcoin (BTC) appears largely unfazed, rallying sharply in recent days. Over the past week, the world’s largest cryptocurrency surged 12%, reaching $123,944.70 — just shy of a new all-time high. With political uncertainty in the spotlight, experts weigh in on the key drivers behind BTC’s momentum and whether a correction is likely if the shutdown persists.

Debasement Trade Driving BTC Demand

All four industry experts consulted by Cryptonews agreed that Bitcoin’s bullish surge is largely linked to the “debasement trade.” Bitwise senior investment strategist Juan Leon explained that the shutdown is a symptom of deeper systemic risks arising from political tension. Investors increasingly seek assets independent of government influence, and Bitcoin, like gold, benefits from this shift.

“The government shutdown underscores systemic risks in the financial system,” Leon said. “Events like these shake confidence in the US dollar and push capital toward independent stores of value such as Bitcoin.”

Traders See Little Long-Term Impact from Shutdown

James Gernetzke, CFO at crypto wallet provider Exodus, noted that the markets don’t anticipate a severe long-term economic fallout from the shutdown. Traders expect the Federal Reserve to maintain a dovish stance, continuing interest rate cuts — a favorable scenario for tech and crypto assets.

“For Bitcoin, October has historically been strong, though seasonality may be coincidental this year,” Gernetzke said. “Profit-taking among early BTC holders seems to have slowed, reducing selling pressure.”

Two Prime CEO Alexander Blume highlighted that Bitcoin’s rally is also fueled by looser monetary policy and strong economic indicators. “There’s little else but more money printing on the horizon, which benefits Bitcoin as a hedge,” he said.

ETFs and Institutional Flows Reinforce Momentum

The debasement trade has manifested in inflows to Bitcoin ETFs, which Leon noted totaled over $2.3 billion since September 29. Institutional demand has become a significant driver of BTC price action, as investors diversify into assets they perceive as safe havens amid political uncertainty.

“BTC and gold are both attracting attention due to diminishing confidence in the US dollar,” Blume explained. “Inflation, geopolitical instability, and excessive government spending are prompting investors to seek alternative stores of value.”

Historically, Bitcoin tends to rally in the months following periods of heightened gold demand, aligning with expectations for a strong Q4 performance. Many traders are positioning themselves early in anticipation of this seasonal boost.

Could the Shutdown Trigger a Correction?

Despite strong momentum, experts caution that prolonged government closures could impact BTC negatively. Leon referenced the longest shutdown in U.S. history during Donald Trump’s first term, which lasted 35 days. He noted that if the current shutdown drags on and economic consequences escalate, sustained risk-off sentiment could pressure Bitcoin.

Hashdex CIO Samir Kerbage echoed this view, emphasizing that BTC may also face volatility if its near all-time highs trigger profit-taking. Conversely, Gernetzke believes the shutdown itself is unlikely to cause a pullback. “Uncertainty around the government generally weakens the US dollar, which typically drives investment toward safe-haven assets like BTC,” he explained.

Altcoins Ride the Wave

Bitcoin isn’t the only cryptocurrency benefiting from this environment. Ether (ETH) rose 12% over the past week, Binance Coin (BNB) surged 22%, and Solana (SOL) jumped 14%. Optimism around potential approval of altcoin ETFs by the U.S. Securities and Exchange Commission is likely contributing to broader market enthusiasm.

Data from Coinglass underscores Bitcoin’s historical resilience in October. Since 2013, BTC has averaged a 20.74% gain throughout the month, with only two months ending in losses. Just four days into October 2025, Bitcoin has already risen 7%, signaling continued bullish sentiment.

What Investors Should Watch

For traders and investors, the key metrics to monitor include government developments, Federal Reserve policy, and institutional ETF inflows. While near-term volatility could emerge if the shutdown continues, the overall narrative remains supportive for Bitcoin and other major cryptocurrencies.

In summary, the combination of political uncertainty, monetary stimulus expectations, institutional flows, and historical seasonal trends have all contributed to Bitcoin’s strong performance. While a pullback remains possible, particularly if the shutdown prolongs, the market currently reflects high confidence that Bitcoin can maintain upward momentum throughout October.