The parley between Democrats and Republicans over the legislation to protect approximately 700,000 younger immigrants from getting deported resulted in the shutdown of the federal government. If this closure extends it could lead to a huge loss in the US economy.
Failed Senate talks result in federal government shutdown
On Friday, at midnight, the federal government shutdown halted all the activities except the essential operations. This Washington debacle inaugurated the one year anniversary of President Donald Trump. The partisan stare down was over the demands of the Democrats for a solution to the legislation that protects about 700,000 young immigrants from being deported.
A notice has been served by the Democrats in the Senate that they will filibuster a four-week funding bill that passed on Thursday. This has been the fourth government shutdown in a quarter century. The last shut down had been in October 2013 that accounted the loss of about 6.6 million work days. The 2013 shutdown sent approximately 850,000 federal employees home and cost the economy about $20 billion. However, this shut down led to the boom in bitcoin prices.
However, the leading Democrats and Republicans are already on the move to work out a compromise in order to avert a lengthy shutdown. Being at the start of the weekend, the immediate effects of the shutdown will be muted but if it gets prolonged, the damage would build quickly.
The Senate scheduled a vote on the House-passed plan after many hours of meetings and calls. Though it gained 50 votes, 60 were required to break the Democratic filibuster. Mitch McConnell, the Senate Majority Leader even allowed the roll call to exceed 90 minutes when the usual norm is only 20 minutes.
McConnell pointed out that:
“Democratic senators’ fixation on illegal immigration has already blocked us from making progress on long-term spending talks. That same fixation has them threatening to filibuster funding for the government.”
The Senate Democratic leader Chuck Schumer has also been brought by Trump but emerged without an agreement. On returning to Capitol Hill, he stated:
“We made some progress, but we still have a good number of disagreements.”
When Schumer got snubbed for his attempt to vote on Thursday, he clarified that:
“We can’t keep kicking the can down the road. In another month, we’ll be right back here, at this moment, with the same web of problems at our feet, in no better position to solve them.”
The repercussions of shutdown on Bitcoin Awaited
The data shows that last shutdowns didn’t affect the stock markets much but the last shut down in October 2013 assisted bitcoin’s price increase. Keeping in view the increase in the volume of participation for Bitcoin, we can expect wider effects if the shut down extends for few weeks.
Also, the role of wall street and the institutional investment both derivatives of fiat economy was very minimal in 2013. But with bitcoin derivatives being traded on CME and CBOE, the crypto market is open for institutional investors.
As of now, the shutdown won’t affect the economy, but if it prolongs, there could be serious repercussions on not only the US but ultimately the world economy.
Do you think the Democrats and Republics would be able to make a deal? Or would it lead to an extended closure? How do you think it will affect the cryptocurrency economy?
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com