The U.S. government shutdown has triggered a surge in Bitcoin and other cryptocurrencies, with BTC briefly topping $119,000.
Why it matters: The shutdown could delay key economic reports, potentially leading the Federal Reserve to cut interest rates further, creating a positive liquidity impulse that historically supports Bitcoin.
The details:
- Bitcoin prices jumped nearly 4% in the past 24 hours, while other major tokens such as Ether have seen increases from 4% to 7%.
- The CoinDesk 20 Index (CD20) climbed 5% to 4,217 points.
- The shutdown could delay Friday’s nonfarm payroll report, setting the stage for easier access to funding, reduced borrowing costs, and encouraging economic growth and risk-taking in financial markets.
Matt Mena, Crypto Research Strategist at 21Shares, said, “If ADP is a leading signal and the BLS print is delayed, the Fed is likely to deliver a 25 bp cut in October and pair it with guidance for a potential second cut by December. That mix should lower real yields and soften the dollar into Q4. This will likely create a positive liquidity impulse that historically supports BTC.”
Options look cheap: Greg Magadini, Director of Derivatives at Amberdata, noted that Deribit-listed options are currently cheap at the front-end, making strategies like long straddles appealing to play the impending volatility boom.
What’s next: Investors are advised to closely monitor these developments as they could signal the next significant movement in the crypto market.
Traders in prediction markets are betting that the U.S. government shutdown could last nearly two weeks.
The details:
- On Kalshi, a federally regulated prediction market, the current forecast implies the stoppage will last 11.1 days.
- On Polymarket, traders see the highest likelihood that the government won’t reopen until Oct. 15 or later, with that outcome carrying about a 38% probability.
- Democrats are leveraging their position to push for the continuation and expansion of tax breaks for about 24 million Americans who buy insurance through the Affordable Care Act (ACA).
The stakes: A longer-than-normal stoppage could weigh on an already fragile economy and put pressure on a stock market near record highs.
What to watch: While markets have remained relatively calm during past government shutdowns, a prolonged closure this time could rattle investor confidence.
