Bitcoin Struggles to Catch Up as U.S. Stocks Rally After Historic Government Shutdown Ends
The world’s largest cryptocurrency, Bitcoin (BTCUSD), is trailing behind U.S. stocks even as federal funding resumes. Increased risk-appetite in equities has not yet translated into fiery crypto gains because of lingering cautious sentiment and weak flows.
Why Bitcoin is lagging while U.S. stocks rally after the shutdown ended
Markets breathed a sigh of relief when the U.S. government shutdown officially ended on U.S. stocks led by the S&P 500 and Nasdaq, jumped on renewed fiscal certainty and improved liquidity. However, Bitcoin failed to ride that wave. The reasons: weak institutional eco-flows, fatigue after a recent wipe-out, and a shift of capital toward traditional risk assets.
Bitcoin’s price action in the wake of renewed U.S. equity strength
Bitcoin recently rebounded to around US$104,873.50, up 1.73 % on Wednesday, yet still well below the key threshold near US$110,000. The Economic Times. In contrast, equity markets advanced on the relief of federal operations resuming.
Technical headwinds
Bitcoin remains pinned below its 200-day moving average (near US$110,000) and open interest has dropped from US$94 billion to about US$68 billion, indicating waning leveraged enthusiasm.
ETF inflows are mixed
While traditional markets saw broad inflows, Bitcoin’s institutional flows are uneven. U.S. spot Bitcoin ETFs logged a sizeable US$523.98 million inflow recently, reversing a week-long withdrawal streak of about US$1.22 billion. The Economic Times Yet other data points show long-term holders dumping roughly US$45 billion in recent weeks.
Why is that happening? Because Bitcoin is still perceived as a high-volatility asset. Even though risk appetite improved in the broader market, crypto investors are cautious due to recent large sell-offs and unclear catalysts for sustained upside.
How the end of the shutdown affects risk assets and Bitcoin
When fiscal uncertainty ends, capital often flows into equities like the S&P 500 rather than speculative niche assets. Stocks benefit from improved market breadth and liquidity while Bitcoin remains in a separate risk-bucket.
Liquidity and Treasury yield dynamics
A shutdown resolution means Treasury operations resume, which impacts liquidity and interest-rate expectations. Rising yields often weigh on non-yielding assets such as crypto. Bitcoin is indirectly influenced via macro factors like liquidity cycles, institutional risk appetite, and tech stock momentum.
Sentiment and rotation
Investors using AI Stock research tools may tilt toward large-cap equities given improved clarity. With retail flows and sentiment shifting, crypto is taking a back seat for now. Reports note that money is returning to stock funds while crypto holdings feel the drag.
What changed today? The shutdown ending removes a major overhead risk for U.S. markets. That has sapped one driver for Bitcoin’s ‘alternative asset’ narrative and reinforced the normalisation of flows back into traditional assets rather than speculative ones.
Why Bitcoin is lagging despite positive institutional signals
Although some Bitcoin ETFs registered inflows, the broader institutional narrative is less enthusiastic. One analysis flagged a US$25 billion “Bitcoin bet” as fraying since many large buyers paused purchases.
Market structure and leverage
Volatility in crypto markets remains elevated. A massive liquidation event, worth over US$19 billion, occurred in early October after geopolitical and tariff shocks.This has made large new allocations hesitant.
Competition for capital
Money rotating into equities, especially tech stocks benefiting from pro-economic policies, leaves less capital for Bitcoin. Also, momentum traders appear to favour stocks over crypto for now given clearer catalysts.
Could this trend reverse soon? Yes, but only if a fresh catalyst emerges for Bitcoin specifically—such as major ETF inflows, macro policy surprise favouring digital assets, or a breakdown in risk appetite prompting a flight to alternatives. Until then the lag may persist.
Key takeaways and what to watch next
- Bitcoin is underperforming equities because the shutdown end boosted stocks more directly than crypto.
- Technical and institutional metrics for Bitcoin remain weak relative to their peak, keeping a lid on momentum.
- The shift in investor flows towards broad risk assets implies Bitcoin is secondary in the current cycle.
What to watch:
- Renewed changes in inflows into U.S. spot Bitcoin ETFs and how those compare with equity fund flows.
- Treasury yields and liquidity metrics, since rising yields or tighter liquidity can hurt Bitcoin’s appeal.
- Market breadth and risk appetite gauges in equities: if these fade, Bitcoin may benefit as investors hunt alternative plays.
- Crypto-specific catalysts such as regulatory clarity, large-scale corporate adoption or unique macro shocks favouring digital assets.
Conclusion
Bitcoin is poised at a crossroads following the end of the U.S. government shutdown. While stocks have surged on clearer policy and stronger liquidity, Bitcoin continues to struggle to catch up. The story has shifted: it is no longer just about crypto; it is about where capital goes when macro conditions improve.
For now, Bitcoin remains under pressure from weak flows, technical hurdles, and competition from equities. The next leg of recovery may require a catalyst unique to crypto and a genuine rotation of risk capital back into digital assets.
FAQs
Bitcoin is lagging because traders are still cautious after recent losses. U.S. stocks reacted faster to the shutdown ending, which boosted liquidity. Most new money is flowing into equities instead of crypto.
Yes, the shutdown created uncertainty that pushed traders toward safer assets. Once it ended, confidence returned to stocks first, not crypto. Bitcoin is still recovering from earlier volatility.
Bitcoin may catch up if ETF inflows rise again or macro sentiment improves. A drop in Treasury yields could also support crypto demand.It depends on whether investors rotate back into high-risk assets.
They are helping, but inflows remain uneven. Some ETF days show strong buying, while long-term holders still sell. Sustained inflows are needed for a clearer uptrend.
Bitcoin is viewed as high risk, not a safe haven like gold or bonds. During major U.S. events, investors usually choose equities or cash first. Bitcoin tends to recover later once risk appetite grows.
Disclaimer
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
