A potential government shutdown looms on the horizon, which could significantly affect the release of key economic data, including the much-anticipated jobs report scheduled for Friday. This report is crucial for Bitcoin traders who rely on it to forecast possible rate cuts by the Federal Reserve. As uncertainty around the shutdown grows, Bitcoin’s price has surpassed $114,000 but currently remains 0.7% lower than its value from two weeks ago.
Historically, government shutdowns have produced mixed results for Bitcoin. During the 2013 shutdown, Bitcoin experienced a surge of 14%, climbing from $132.04 to $151.34. Conversely, the 2018-2019 shutdown saw a decline, with Bitcoin falling 6% from $3,802.22 to $3,575.85 over a period of 35 days. Analysts are divided on how the current shutdown situation will impact Bitcoin, suggesting that heightened volatility may be expected in the near term.
“Rate-cut expectations typically bolster risk assets, yet prevailing concerns about bubbles and political risk introduce additional volatility,” noted analysts from Bitunix. They indicated that although confirmed rate cuts in the medium term would support liquidity and risk assets, fears of a bubble and shutdown risk could increase market fragility, leading to more pronounced price swings.
The urgency surrounding the government shutdown is palpable; unless Congress reaches an agreement on a short-term funding resolution by midnight on Tuesday, federal funding will cease for “non-essential” functions. The impending deadline aligns with the end of the federal government’s fiscal year on September 30.
John Reid, Deutsche Bank’s Head of Macro and Thematic Research, commented that the upcoming jobs report could be adversely affected if a shutdown occurs. The Bureau of Labor Statistics, which operates without essential status during a shutdown, would be forced to delay the report, putting further strain on financial markets and investor sentiment. Historical precedents reveal that the 2013 shutdown led to the September jobs data being released much later than usual.
As of now, Bitcoin’s price has risen 3.8% in the last day, but the market dynamics could shift dramatically based on whether the jobs report is available and what the data reveals. Nicolai Sondergaard, a Research Analyst at Nansen, expressed concerns over the potential for short-term volatility in the crypto markets tied to the uncertainty surrounding the shutdown. “I wonder if investors will assume the ‘shutdown’ will be resolved quickly,” he noted, suggesting that broader financial markets might react even before the shutdown occurs.
The current state of the Bitcoin market is significantly different from past shutdown periods, according to Julio Moreno, head of research at Cryptoquant. He pointed out that in 2013, Bitcoin was in the midst of a bull run, with strong demand. However, during the 2018 shutdown, it was amidst a bear market. Presently, demand appears to be growing, particularly as Bitcoin enters the typically favorable fourth quarter.
As anticipation builds regarding the jobs report, the fate of Bitcoin in a potentially tumultuous market remains uncertain. Users of Myriad, a prediction market affiliated with Decrypt, have shown increasing skepticism about the Federal Open Markets Committee implementing two rate changes in 2025, with doubts rising from 40% in early September to 75% now. This sentiment suggests a complex financial landscape ahead, with repercussions that could ripple across markets if the shutdown proceeds.
