Tag: Market

• Bitcoin has surged to its highest level in over two months, above $119,000.
• The rally is a direct reaction to the US government shutting down operations.
• The shutdown is expected to create a “positive liquidity impulse” for markets.

The political paralysis in Washington has become the crypto market’s rocket fuel.

Bitcoin has surged to its highest level in over two months, blasting past the $119,000 mark as the US government officially shut down its operations, a dramatic development that traders are betting will ultimately unleash a wave of new liquidity into the financial system.

The leading cryptocurrency has jumped nearly 4 percent in the past 24 hours, with prices briefly touching $119,455 for the first time since mid-August.

The rally was broad-based, with other major tokens like Ether, XRP, and Solana all rising between 4 and 7 percent.

This is the market’s clear and unambiguous verdict on the chaos gripping the US capital.

A bet on a blind Fed, a wager on new money

The logic behind the rally is a bet on the second-order effects of the shutdown. With the government’s lights now off, the release of key economic data—most notably Friday’s all-important nonfarm payrolls report—will likely be delayed.

This data blackout will effectively blind the Federal Reserve, making it far more likely to proceed with its planned interest rate cuts.

“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 that keeps a second cut on the table by December,” said Matt Mena, a Crypto Research Strategist at 21Shares.

This is the “positive liquidity impulse” that has the market so excited: an expansion of liquidity that makes it easier and cheaper to borrow money, a dynamic that encourages economic growth and, crucially, risk-taking in financial markets.

For some, this shutdown surge is more than just a temporary trade; it is a sign of a fundamental shift in the market’s DNA.

“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.

“Investors should be watching this moment closely – it could mark the next explosive leg higher in crypto markets.”

The volatility trade: ‘options look cheap’

This expectation of an “explosive” move is now being actively priced into the derivatives market.

According to Greg Magadini, the Director of Derivatives at Amberdata, the long dry spell of low volatility may be about to end, and options are currently looking cheap.

“After a long ‘dry spell’ for BTC volatility, the US government shutdown could finally be the catalyst to make BTC move a lot,” Magadini told CoinDesk.

This, coupled with the steep contango in implied volatility term structure, makes options look cheap.

That “steep contango” means the market is expecting future volatility to be significantly higher than it is today, making near-term options a relative bargain.

Magadini highlighted the “long straddle”—a strategy that profits from a big price move in either direction—as a preferred way to play the impending volatility boom.

“These catalysts could either cause BTC to rally (as a dollar hedge) or crash (if risk assets panic),” he said, explaining why a bet on pure volatility, rather than direction, is so appealing at this uncertain juncture. The quiet days, it seems, are over.