Pattern Watch: Bitcoin Found Its Bear Market Floor During the Previous U.S. Government Shutdown.

U.S. Shutdown Revives 2018 Parallels as Bitcoin and Gold Diverge

The U.S. government shutdown has stalled economic data releases and added a layer of uncertainty to already volatile markets. Traders, deprived of macro signals, are drawing comparisons to the 2018–2019 shutdown, which coincided with Bitcoin’s bear market bottom.

That earlier shutdown — spanning Dec. 22, 2018, to Jan. 25, 2019 — overlapped with Bitcoin’s decline from roughly $6,000 to $3,000, marking the final capitulation of that cycle. BTC’s rebound began in the weeks after the government reopened, delivering seven straight weeks of gains and pushing the price above $5,000 by April 2019.

While no direct link can be proven, the timing suggests that periods of fiscal disruption often align with sentiment resets in risk assets. Since the current shutdown began, Bitcoin has dropped about 1%, tracking broader market weakness as the Nasdaq Composite also fell 1%.

$20B Liquidation Flush Resets Market Leverage

Friday’s market rout triggered the largest liquidation event in crypto history, wiping out nearly $20 billion in leveraged positions across Bitcoin, Ether, and altcoins. BTC briefly sank to $107,000 on Coinbase, with some exchanges recording even deeper intraday lows.

According to CoinMetrics, the selloff marked a long-needed clearing of excess leverage rather than a structural failure:

“The great deleveraging was disruptive but healthy. The market is now in a cleaner, more stable state,” the analytics firm wrote.

The event has drawn comparisons to similar “reset moments” in past cycles that preceded periods of sustained recovery.

Gold Surge Underscores Flight to Hard Assets

Meanwhile, gold prices have surged to a record $4,200 per ounce, rising 61% year-to-date and 10% since the shutdown began. The rally, coupled with strength in silver, palladium, and platinum, reflects a growing preference for real assets amid macro instability.

Historically, Bitcoin tends to trail gold’s rallies by roughly 100 days, according to analyst Joe Consorti. Using JPMorgan’s volatility-adjusted model, that relationship suggests a potential BTC fair value of $165,000 if the correlation holds through year-end.

Market Looking for a Post-Flush Rebound

Though Bitcoin’s pullback has unsettled traders, the combination of record gold prices, a massive leverage reset, and rising expectations for Federal Reserve rate cuts may create a firmer base for the next move higher.

As in 2018, the current environment may prove to be a macro inflection point — one where uncertainty and stress ultimately lay the groundwork for recovery.