Bitcoin Hits New All-Time High Amid US Government Shutdown and Record ETF Inflows
Bitcoin surged to a new all-time high of $125,689 during Asian trading hours on Sunday, propelled by a rare combination of safe-haven demand and unprecedented institutional interest amid the ongoing U.S. government shutdown. This surge marks a 2.68% increase over its previous record of $124,514 set on August 14, 2025. The rally triggered significant short liquidations, with over $200 million in short positions wiped out in the past 24 hours, including $100 million in just one hour as bearish traders rushed to cover losses.
Government Shutdown Fuels Safe-Haven Demand
The catalyst behind Bitcoin’s rally is the U.S. government entering its fourth day of shutdown. Unlike the shutdowns in 2018-2019, which had little impact on Bitcoin, the current political uncertainty has driven investors to seek alternatives to traditional financial assets. Geoff Kendrick, global head of digital assets research at Standard Chartered, highlighted that Bitcoin has become increasingly correlated with U.S. government risk indicators this year. Bitcoin is now viewed as a hedge against government dysfunction, trading alongside U.S. Treasury term premiums that reflect investors’ demand for additional yield on long-term government bonds. Analysts at Standard Chartered predict Bitcoin could rise further to $135,000 in the short term, with some forecasting a surge beyond $200,000 by the end of the year.
Record ETF Inflows Power the Rally
Driving this rally is a surge in institutional demand for Bitcoin, particularly through U.S.-listed Bitcoin exchange-traded funds (ETFs). These ETFs recorded their second-largest weekly inflows ever, totaling $3.24 billion—nearly matching the all-time record of $3.38 billion set in November 2024. This inflow sharply contrasts with the previous week’s $902 million outflows.
Iliya Kalchev, a dispatch analyst at Nexo, noted that if current inflows persist, fourth quarter demand from ETFs could remove over 100,000 BTC from circulation, more than twice the amount of new Bitcoin mined. This high institutional demand played a key role in Bitcoin briefly hitting $123,996 on Friday, its highest price in over six weeks.
Broader Cryptocurrency Market Follows Suit
Other major cryptocurrencies also benefitted from Bitcoin’s momentum. Ethereum crossed above $4,500, XRP gained considerable ground, and Solana made significant advances. The positive trend aligns well with October’s reputation as "Uptober," a month historically marked by strong cryptocurrency gains. Bitcoin typically sees an average increase of 20% in October, making it the second-best month historically after November, which boasts an average 46% gain.
Conclusion
Bitcoin’s record-breaking surge to $125,689 is a sign of its growing role as a safe-haven asset amid political uncertainty and government instability. The U.S. government shutdown has accentuated this trend, pushing investors toward digital assets. Coupled with extraordinary institutional inflows via ETFs, Bitcoin’s demand has soared, leading to significant price gains. With strong market momentum and positive seasonal trends, analysts are optimistic about Bitcoin’s further growth potential in the coming months.
This historic milestone reaffirms Bitcoin’s increasing acceptance among institutional investors and its evolving role as a hedge against macroeconomic and political risks.