Bitcoin and other cryptocurrencies were rallying on Wednesday, likely benefiting from the uncertainty around the U.S. government shutdown.
The world's largest token was up 2.7% to $116,258 over the past 24 hours, according to data from CoinDesk. It's now trading about 7% off the record high it hit in August.
Other tokens were also rising. Ethereum gained 3.3%, Solana added 5.7%, and XRP rose 3.2% over the past 24 hours, per the Kraken crypto exchange.
The moves higher came after the Senate failed to pass a temporary funding bill, which meant that the government shut down just after midnight Wednesday.
Cryptos appeared to be benefiting from the uncertainty. That's likely because prolonged shutdowns tend to weigh on the U.S. dollar, and investors tend to see Bitcoin and its peers as an alternative to the greenback. The dollar was flat against a weighted basket of its peers on Wednesday.
Digital-asset prices could reverse course if the shutdown drags on for a while, though. That would suspend the release of monthly jobs and inflation figures, which could make it tougher for the Federal Reserve to justify cutting interest rates, given that policymakers have said they'll only ease monetary policy if the data justify such an approach.
When borrowing costs are elevated, cryptos tend to struggle, because there's more incentive for investors to pile into assets that offer yields, such as bonds and savings accounts.
Tokens also tend to do well this time of year. Bitcoin has finished in the green for October 10 times in the past 12 years, and the fourth quarter "remains by far the strongest seasonal stretch for the asset class," Joel Kruger, market strategist at the fintech company LMAX Group, said Wednesday in a research note.
