When the U.S. House passed a spending bill that the Senate approved, the government avoided yet another shutdown. The spending will let the government operate for a few more weeks. It also has an unintended bullish consequence for Bitcoin.
Bitcoin soared from $27,010 before the shutdown threat to over $28,390 on Oct. 2. By the day’s end, BTC-USD settled at $27,515. The government’s increased spending will require the sale of more U.S. treasury. This puts more pressure on treasury bond prices, increasing its yield. Although the U.S. dollar (DXY, UUP) is strong, Bitcoin is stronger.
The role of cryptocurrency, especially Bitcoin and Ethereum (ETH-USD), increases in those volatile times. People have an alternative to a fiat currency that is weighed down by more government debt. Remember that crypto formed as a result of the great financial crisis that banks caused in the last decade. Bitcoin legitimizes the need for a decentralized asset that neither the bank nor the government may control.
While BTC-USD rose, gold slumped from the $1,900-$2,072 range to $1,823. The economic system is increasing its reliance on a cryptocurrency system alternative. It is not looking back to the Bretton Woods system that the U.S. terminated on August 15, 1971.
Look out for gold to weaken from here, further lifting BTC-USD prospects.
