Trump Government Shutdown: Effects on Stock Market and Crypto Market

Donald Trump, the president of the united states ended the government shutdown on 25th January 2019. This shutdown began on 22nd December 2018 and lasted for 35 days. Almost most of the government works were on hold during this shutdown. Now, one must argue that apart from the political impact of this Trump Government Shutdown, what could be its financial impacts. Now, when we are pointing out financial impacts, we are including two markets i.e. the stock market as well as the crypto market.

In this article, we will discuss the effects of Trump Government Shutdown on the stock market and crypto market. We will first introduce the Trump Government Shutdown and finally will point out its effect on the stock market and crypto market individually.

The Trump Government Shutdown:

During the campaign of the presidential election in 2016, Trump had promised to build a border wall between US and Mexico. The expected cost for this action was around $5.7 billion. Trump thought to regain this cost from Mexico. But, this negotiation was refused by the President of Mexico. Eventually, Trump passed an order to build the wall using the existing funding of the federal.

However, a appropriations bill was passed by the Senate in December 2018 and it was not having the fund for the above border wall. Trump refused to sign on this bill as he was focused to include the fund for border wall in this bill. Trump met the top leaders of the Senate on 11 Dec 2018 asking them to support a bill for this border wall having a cost of around $5.7 billion. However, the members refused.

After this declination, Trump announced to start the Government Shutdown in the sake of border security on 22 December 2018. This shutdown expired the funding of various sectors like tax collection, law and regulations etc. Around 0.8 million employees were not paid during this duration. According to a survey, this shutdown cost the US economy around $3.6 billion.

This was a short introduction to the Trump Government Shutdown. Nextly we will see the effects of this shutdown on the stock market.

Effect on the stock market:

Well, if seen at a broad level, shutdowns have never affected the stock market and this shutdown was also not an exception. There wasn’t any major impact of the shutdown on the stock market. The global stock market has risen as well as fallen during the shutdown. During the shutdown, the market fell but for a very short period, around 10-15 days and having no major impact at a global level. During this Trump Government Shutdown, the MSCI World and Asia index have risen 8.1 and 4.2% respectively. The S&P 500 has risen to around 9.3%. So, there is a mix impact on the stock market during the shutdown.

Now let us focus on effects on the stock market after this shutdown. The shutdown has always lead the stock market to rise tremendously after a time gap of 3 months to 1 year after the shutdown. So, it is expected that the stock market will without any doubt, rise significantly after around 3 months of this shutdown.

Now, after the effect on the stock market, let us have a glance at the effect of the Trump Government Shutdown on the crypto market.

Effect on crypto market:

The shutdown may impact the crypto market in both directions as well as indirect way. If we consider the direct impact of the shutdown on the crypto market, then the delay of Bakkt comes first into our mind.

Bakkt was supposed to be launched by the ICE on 24th January 2019. However, ICE was not aware of this shutdown while announcing about the launch of Bakkt. Now, after the shutdown was announced on 22 December 2018, it delayed the launch of Bakkt. It still requires to have some important approvals from the trading commission of the country and as all such commission were off during the shutdown, the Bakkt failed to get these approvals on time and hence was not launched on 24 January 2019. Hence, the shutdown delayed the launch of Bakkt.

Now, let us consider the indirect impact of the shutdown on the crypto market. The price of cryptocurrencies didn’t have some much fluctuation during the shutdown. For example, on 22 December 2018, when the shutdown was announced, BTC was at $ 3882 while on 24 Dec, it was around $ 4311. While on 25 December, it fell to $3756. So, we find that the crypto market faced a mix impact of this shutdown. Someday it rose and someday it fell. So, there was a fluctuation of the impact. Overall, the shutdown doesn’t impact indirectly on the price of cryptocurrencies.

Joyce Lang

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