Bitcoin has surged to its highest level in over two months, briefly reaching $119,455 amidst the backdrop of a U.S. government shutdown. This recent rally, representing a nearly 4% increase in just 24 hours, has been accompanied by significant gains in other major cryptocurrencies such as ether (ETH), XRP, and solana (SOL), which have risen between 4% and 7%. The broader market, as captured by the CoinDesk 20 Index (CD20), has also experienced a 5% jump, climbing to 4,217 points.
Government Shutdown Sparks Market Movements
The rally comes in the wake of a U.S. government shutdown that began on Wednesday after Congress failed to reach a funding agreement. This shutdown has the potential to delay the release of crucial economic data, such as the nonfarm payrolls report, which was due on Friday. The delay in data could set the stage for a liquidity expansion in the financial system, which typically leads to easier access to funding, reduced borrowing costs, and encourages economic growth and risk-taking.
“If ADP is a leading signal and the BLS print is delayed, the Fed is likely to deliver a 25 basis point cut in October and pair it with guidance that keeps a second cut on the table by December,” explained Matt Mena, Crypto Research Strategist at 21Shares. This scenario is expected to lower real yields and weaken the dollar into the fourth quarter, potentially supporting a further rise in Bitcoin prices.
Bitcoin: A Beacon in Uncertain Times
The ADP private payrolls report, released just before the shutdown, indicated a weakening labor market, reinforcing the case for continued interest rate cuts by the Federal Reserve. The central bank had already reduced rates by 25 basis points the previous month and hinted at further easing in the near future.
In this environment of macroeconomic uncertainty and disrupted traditional data releases, Bitcoin is emerging as a resilient asset. “The message is clear: with traditional data releases in flux and macro uncertainty running high, Bitcoin remains one of the few assets that thrives when the old playbook breaks down,” Mena noted. He suggested that Bitcoin’s recent price gain could signal the start of a more significant rally in crypto markets.
Options Market Presents Opportunities
For investors looking to capitalize on Bitcoin’s potential for volatility, options on the Deribit exchange appear particularly attractive. According to Greg Magadini, Amberdata’s Director of Derivatives, the current market conditions and the U.S. government shutdown could act as a catalyst for increased Bitcoin movement. “After a long ‘dry spell’ for BTC volatility, the U.S. government shutdown could finally be the catalyst to make BTC move a lot,” Magadini told CoinDesk.
The options market is currently exhibiting a steep contango in the implied volatility (IV) term structure, characterized by an upward-sloping IV curve from near-term to longer-term maturities. This suggests that the market anticipates higher future volatility, making near-term options relatively cheap. In such a scenario, a long straddle strategy—purchasing both call and put options at the same strike price—could be profitable, as it allows investors to gain from significant price movements in either direction.
What Lies Ahead?
With the U.S. dollar likely to experience significant flows due to the shutdown and the pending payroll report, Bitcoin’s path forward remains uncertain. “These catalysts could either cause BTC to rally (as a dollar hedge) or crash (if risk assets panic),” Magadini explained, highlighting the dual-edged nature of the current market dynamics.
As the financial world grapples with the implications of the government shutdown and potential policy shifts from the Federal Reserve, Bitcoin’s role as a hedge against traditional market instability becomes more pronounced. Investors and analysts will be watching closely to see if this rally marks the beginning of a sustained upward trend or merely a brief surge in response to short-term events. Whatever the case, Bitcoin’s recent price movements underscore its growing significance in the broader financial ecosystem.
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
