Crypto Markets Rally as End of Government Shutdown Draws Near

After a dreadful start to Q4, momentum and sentiment in crypto markets are swinging back towards cautious optimism. With the ongoing government shutdown expected to end in the coming days, market activity is showing signs of increased investor confidence.

Alongside improving price action, a resumption of Government in the U.S. will likely enable the approval of all outstanding Solana ETF filings, bringing seven new $SOL ETFs to Wall Street.

What happened in crypto markets after the last Government shutdown, and will history repeat this time around?

Total Crypto Market Cap Up $100B

Traders and investors breathed a sigh of relief this weekend, after the Senate advanced a bill to end what has been the longest government shutdown in U.S. history. Alongside Government resumption, improving trade relations between the U.S. and China are setting the stage for a temporary recovery.

The prospect of the Government’s return has instilled renewed confidence in markets, with Bitcoin climbing back over $106,000 and over $100B being added to crypto’s total market cap. According to Coinglass data, over $257M in short positions have been liquidated in the past 24 hours. 

Amidst improving conditions Solana is showing plenty of resilience, bouncing 12% off of Friday’s lows of $150. It appears that institutional investors are in accumulation mode, with $SOL ETFs witnessing $137M in capital inflows last week. 

Comparatively, $BTC and $ETH ETFs suffered net outflows over the same period, highlighting $SOL’s relative strength in what is still an uncertain landscape. 

Seven $SOL ETFs to Launch off Government’s Return?

With Polymarket giving an 86% chance of the ongoing Government shutdown ending between the 12th and 15th of November, Solana’s ETFs scene is preparing for an influx of new listings. 

While Bitwise and Grayscale were able to bypass the shutdown and bring their $SOL ETFs to market sooner, the SEC will be able to approve the remaining listings once officially back in office.

As the first pure $SOL staking ETF to hit Wall Street, Bitwise’s $BSOL has enjoyed strong inflows since its debut. $BSOL currently boasts $478M in AUM, commanding a powerful lead over rivals like GrayScale’s $GSOL ($96.7M), and REX-Shares $SSK ($276M). 

The launch of $BSOL has inflicted significant drain on $SSK’s AUM, which previously held $417M on October 21st. $SSK’s AUM has since dropped by 33%, while $SOL price has fallen by only 12% in the same timespan.

Bitwise dominates the landscape for now, but incoming $SOL ETFs from TradFi giants like Franklin Templeton and Fidelity are expected to bring plenty of competition to Solana’s ETF scene. 

Fidelity’s Bitcoin ETF, $FBTC, is over four times larger than Bitwise’s equivalent $BITB, suggesting the firm could have a larger client base with deeper pockets. While impossible to predict, if Fidelity’s $SOL ETF were to replicate the AUM multiple of its $BTC counterpart, the new fund could expect to see an AUM of ~$1.8B within two weeks of launch.

End of Last Govt Shutdown Preceded 300% Move for BTC

As surprising as it sounds, President Donald Trump has broken his own record, facilitating once again the longest Government shutdown in U.S. history. While an end date is in sight, the ongoing shutdown has already lasted 40 days, 6 days longer than the 34-day shutdown of President Trump’s first term.

Although previous shutdowns likely had little to do with crypto market dynamics at the time, $BTC has historically performed well in the months following a resumption of government. In 2013, $BTC surged from $142 on October 17 to a peak of $1152 on December 5. 

Similarly, $BTC soared following the government shutdown of 2018-2019, rising from $3,067 on January 25 to highs of $13,017 on June 27.

While these multiples are certainly mouth-watering for traders and investors, its important to remember that, at the time, Bitcoin was a far less mature and resilient asset than it is now, rising from a market capitalization of $198B to over $2T in six short years. Bitcoin volatility has dropped dramatically since then, and it is extremely unlikely that markets would see similar dynamics following the end of the current shutdown.

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