Bitcoin climbed on Thursday to its highest level in more than two months, coinciding with the official start of the US government shutdown.
The world’s largest cryptocurrency by market capitalization rose about 3.5% in the past 24 hours, briefly touching $119,455 (£88,516) before easing back to trade near $118,500. This marks Bitcoin’s strongest level since mid-August.
Other major cryptocurrencies also posted gains over the past day: Ethereum rose 5.5%, XRP gained 4%, and Solana advanced 6%.
The global cryptocurrency market cap reached $4.17 trillion today, up 4% within 24 hours. Bitcoin’s market dominance currently stands at 56.7%, while Ethereum holds 12.7%, underscoring Bitcoin’s continued position as the strongest asset in investor demand.
Government Shutdown and Its Market Impact
This surge coincided with the US government’s failure to reach a funding agreement, forcing federal agencies to close and resulting in temporary furloughs for around 750,000 workers at an estimated daily cost of $400 million.
The shutdown also delays the release of key economic data, including the highly anticipated nonfarm payrolls report due Friday, potentially altering monetary policy signals and shifting risk sentiment in markets.
Timothy Messer, head of research at BRN, said: “The US shutdown adds a new variable by removing key economic data and amplifying uncertainty. Options markets already reflect this fragility, as traders hedge against downside risks. At the same time, Bitcoin options remain relatively cheap compared with realized volatility.”
In other words, investors are paying for downside protection, but the cost of this insurance remains low relative to Bitcoin’s volatility, signaling a market in wait-and-see mode that leaves room for traders to speculate on big moves at low cost.
Gold and Cryptocurrencies in the Spotlight
Gold has also been a key beneficiary of mounting financial and political pressures in the US, ending September with a 12% monthly gain — its strongest advance since 2011. This reflects a broader investor shift toward tangible assets, as Fed officials continue to warn about inflation remaining “too high.”
New York Fed President John Williams reiterated that interest rate cuts remain conditional on incoming economic data, which may now face delays due to the shutdown.
Meanwhile, the cryptocurrency market sits between supportive inflows and cautious derivatives positioning. ETFs have provided momentum, with spot Bitcoin ETFs recording net inflows of $676 million on Wednesday, marking a third straight day of gains. Spot Ethereum ETFs also logged $80.79 million in inflows over the same period.
Is the Shutdown’s Impact Overstated?
Some analysts argue the shutdown’s market impact may be overstated. QCP Capital noted: “From a fiscal policy perspective, the US government shutdown should be a marginal market event, aside from delayed data and media noise. Essential services remain in place, wage compensation cushions income effects, and previous episodes did not derail risk assets. During the 35-day 2018–2019 shutdown, the S&P 500 rose about 10%. Given Bitcoin’s high correlation with equities, we view any pullbacks linked to the shutdown as buying opportunities, rather than chasing rallies.”
October: Historically a Strong Month for Bitcoin
Historically, October has been one of Bitcoin’s strongest months. Over the past 12 years, Bitcoin has posted gains in 10 Octobers, ranging from +10% to +40%. Seasonal patterns also tend to support Q4 overall, with Bitcoin rising in four of the last five fourth quarters.
CryptoQuant analyst Alex Adler Jr. noted that the current market setup shows Bitcoin in a “balance with upside potential” toward $130,000:
“The upper bound of this range is currently around $130,000, an area where short-term holders often take profits.”
With Bitcoin already pushing toward its two-month highs, seasonal historical factors and technical positioning suggest that the bullish momentum could continue through year-end.
