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BTC Surges as U.S. Government Averts Shutdown — Can it Sustain the Momentum?

Published October 2, 2023 9:18 AM
James Morales
Published October 2, 2023 9:18 AM
Key Takeaways
  • The US government will remain open after lawmakers brokered a last-minute funding deal.
  • Bitcoin and other major cryptocurrencies surged in value on the news.
  • However, uncertainties surrounding the future of crypto markets and spot Bitcoin ETFs remain.

Over the weekend, the US government narrowly avoided grinding to a halt after House Speaker Kevin McCarthy brokered a last-minute deal with Democrats. 

As news broke that the House of Representatives had voted to approve a temporary funding measure on Sunday, the price of Bitcoin jumped by a thousand dollars. But while it bought the government 45 days to come up with a new funding plan, the fragile peace leaves many uncertainties hanging over crypto markets

Bitcoin Surges as Shutdown Avoided

Having traded flat at around $27,000 for most of Sunday, September 1, 2023, as news that the US government had averted a shutdown in the afternoon, the price of BTC surged to over $28,000.

On Monday morning, the cryptocurrency is up 4.61% in 24 hours and showing bullish momentum as it approaches $28,500.

Bitcoin price
  Bitcoin surges on news that US lawmakers avoided a government shutdown

Hot in pursuit, the price of ETH followed a similar pattern, jumping to over $1,700 for the first time since mid-August upon news of the House deal and remaining buoyant into Monday.

However, despite the otherwise rosy outlook, uncertainty over the future of crypto Exchange-Treaded Funds (ETFs) casts a lingering shadow over the market.

SEC Gives the Greenlight for ETH Futures Funds

After the US Securities and Exchange Commission (SEC) scrambled to approve the first Ether futures ETF before a potential government shutdown, over the weekend, three asset managers were granted permission to list funds holding Ether futures contracts.

On Monday, VanEck launched its Ethereum Strategy ETF  with the expectation that it will begin trading in the coming days.

Meanwhile, Valkyrie said  it expects its registration with the SEC to convert its existing Bitcoin futures ETF into a mixed BTC and ETH fund will become effective by Tuesday.

Finally, according to Nasdaq , ProShares has also received the go-ahead from the SEC to start investing in ETH futures.

With the latest ETF approvals, the SEC appears to be moving in the right direction and the availability of Ethereum futures funds will likely create an influx of institutional investment in crypto markets.

But will US investors ever be able to purchase shares in regulated crypto spot funds?

Still no Certainty for Bitcoin Spot ETF Applications

Although the threat of a government shutdown accelerated the SEC’s approval of Ether futures funds, it appears to have had the opposite effect on applications to list Bitcoin spot ETFs.

Having previously said it would deliver verdicts on spot Bitcoin ETF applications from BlackRock, Valkyrie and Bitwise by mid-October, on Friday, September 29, the SEC postponed its decision until January.

With the US government still on course to shut down on Saturday, the SEC announced similar delays for applications from Fidelity, VanEck, and WidsomTree.

The regulator said it was instituting additional proceedings to determine whether to approve or not the ETFs. 

“Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved,” the SEC said  in a recent filing.

With the SEC now embarking on another round of consultancy, none of the applications to list spot Bitcoin funds in the US will be approved until mid-January at the earliest. Moreover, if US lawmakers fail to negotiate a more long-term solution to the government funding impasse, another round of political crises could further stall their progress.

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