Trump’s US Government Shutdown is Harming the Market: Is a Crypto Recovery Ahead?
The ongoing U.S. government shutdown has reached its 10th day during Donald Trump’s second term, leading to a standstill in Washington and unsettling the digital currency crypto market. With Congress at an impasse regarding border safety and budgetary matters, investors are preparing for ongoing fluctuations.
As conventional markets falter, the values of significant cryptocurrencies such as BTC, Ethereum, and Litecoin have retraced amidst confusion, yet analysts are uptrend that this downturn is short-lived.
The pressing inquiry for traders remains: when Washington resumes operations and ETF approvals are back on track, will cryptocurrency prices rebound?
How Is the U.S. Shutdown Affecting Crypto Markets?
The partial government shutdown in October 2025 has led to the cessation of essential federal activities, resulting in over 800,000 federal employees being furloughed, and agencies like the SEC, IRS, and CFTC either being fully closed or functioning with minimal staff.
Why do the markets seem oddly unperturbed by the U.S. government shutdown? Alec Phillips, chief U.S. political economist at Goldman Sachs Research, provides insights on the latest episode of Exchanges: https://t.co/ognNi1Kawc pic.twitter.com/pRckp8PuAF
— Goldman Sachs (@GoldmanSachs) October 9, 2025
The current impasse has stalled all ongoing cryptocurrency ETF evaluations, leaving over 90 applications in uncertainty, covering assets from DOGE to XRP, LTC, and HBAR. The SEC’s “emergency-only” protocol prevents even nearly finalized ETFs, like those from Canary Capital for Litecoin (LTCC) and HBAR (HBR), from proceeding until funding resumes. What’s the outcome?
Fears among investors have prompted sell-offs in various altcoins, triggering
Hedera Hashgraph
0.77%
Hedera Hashgraph
HBAR
Price
$0.2152
0.77% /24h
Volume in 24h
$233.07M
Price 7d
down and
Litecoin
10.84%
Litecoin
LTC
Price
$129.37
10.84% /24h
Volume in 24h
$2.23B
Price 7d
declining. Concurrently, Bitcoin briefly approached $120K before finding base level.
As per Eric Balchunas, this could indeed be the final action before launching the ETF: “which is usually the last component updated before going live. However, with the shutdown… pic.twitter.com/hBp82IZRf4
— ALLINCRYPTO (@RealAllinCrypto) October 8, 2025
Traditionally, government shutdowns incite short-term fluctuations but minimal lasting damage. Yet in the U.S. digital currency domain, where compliance and ETF approvals shape sentiment, the timing couldn’t be more unfortunate.
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Why Are Analysts Bullish About a Crypto Rebound?
In spite of imminent challenges, the majority of analysts view this correction as mere temporary turbulence, not the conclusion of the crypto cycle.
- Both BTC and Hold have acted as “safe havens”, with gold achieving new peaks and BTC recovering to $120 after the dip.
- The FIT21 crypto framework and anticipated ETF approvals are expected to recommence promptly post-shutdown, possibly igniting the next increase in Q4.
- Bloomberg’s Eric Balchunas and James Seyffart have confirmed that both LTC and HBAR ETFs are “on the goal line” with just final disclosures required, which is the last hurdle before official listing.
Once greenlit, ETFs could stimulate billions in inflows, enhancing accessibility for traditional investors. This is why some traders perceive the shutdown as a brief hodl before lift-off.
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Could Litecoin, HBAR, and Others Be the First to Surge?
Absolutely – and there’s increasing evidence backing this. Litecoin (LTC) is already on the move, soaring over 10% above the $130 mark, while Hedera (HBAR) is poised to follow.
(Source – TradingView)
It appears traders are already positioning themselves ahead of an imminent end to the shutdown, with LTC surpassing $130. If this trend continues, HBAR may experience a similar upswing, potentially reaching the $0.236 mark. RSI indicators seem to have hit their low point, and with BTC maintaining support, this outcome appears highly likely.
(Source – TradingView)
When Can We Expect Crypto to Rise Again?
All indicators suggest a rebound is forthcoming once the government reopens and ETF approvals recommence. Indeed, we can observe it taking shape even prior to that, as the crypto price of LTC rises. Shutdowns often lead to transient selling, but market demand for risk assets typically surges once clarity is restored.
In summary, Trump’s shutdown may be disrupting markets right now, but it also paves the way for a vigorous recovery once Washington resumes regular operations. When that time comes, anticipate the U.S. crypto landscape to rise again, spearheaded by the very tokens that are currently enduring the largest declines.
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