The U.S. government officially entered a shutdown at midnight after lawmakers in Congress failed to pass a new funding bill. This immediate cessation of funding, which expired at 12:01 a.m., has left significant portions of the federal apparatus shuttered, with Social Security recipients, federal workers, and travelers facing immediate disruption. Markets have already begun to show signs of stress.

In response to the uncertainty, Wall Street experienced a downturn in early trading, with futures on the three major U.S. indexes pointing lower. The S&P 500 was down 0.58%, Dow futures were off 0.52%, and Nasdaq futures declined by 0.67% ahead of the opening bell. However, amidst this traditional market slump, two safe-haven assets saw significant gains.

Bitcoin’s price surged to fresh highs, trading above $118,000 and reaching $118,193 at the time of writing. Despite recent sideways trading, key liquidity indicators suggest a potential breakout. Global M2 growth, stablecoin supply trends, and gold’s rally—which Bitcoin has historically tracked with a 40-day lag—all point towards upward momentum, leading some analysts to eye a target of $150,000 in early November. Simultaneously, gold also spiked, reaching an all-time record above $3,900 an ounce as investors sought refuge in traditional safe-haven assets.

The government shutdown also poses significant challenges to economic data transparency. With a “blackout” on government statistics, the Bureau of Labor Statistics will not release crucial reports such as weekly jobless claims or the September payrolls report. Furthermore, inflation data slated for mid-October could be delayed if the standoff in Congress persists. This murky economic outlook, exacerbated by the absence of critical jobs reports, leaves the Federal Reserve to make rate decisions without complete information.

Economists have warned of the tangible economic impact, estimating that each week of a government shutdown could trim GDP growth by 0.1–0.2 percentage points, with a quarter-long closure potentially shaving 2.4 points off the fourth quarter’s growth. Amid this heightened uncertainty and economic strain, Bitcoin is increasingly stepping into a role traditionally held by gold and Wall Street, being perceived as a hedge against inflation and political risk. The cryptocurrency has rallied sharply, rising more than 25% year-to-date, driven by institutional adoption.

While historical data indicates that markets often rebound quickly from shutdowns, with equities ending positive in over half of the 20 shutdowns since 1976, the current situation carries heightened risks. Threats of benefit cuts and layoffs could intensify the impact this time, making the duration and resolution of the government shutdown critical for market stability and economic recovery.