Bitcoin and Gold Surge as Government Shutdown Delays Economic Data, Fueling Rate Cut Expectations

Bitcoin (BTC) appears to be entering a critical phase as macroeconomic forces and cryptocurrency-specific factors converge. With the U.S. government shutdown delaying key economic indicators like employment reports, traders are increasingly turning to alternative assets, particularly bitcoin and gold. BTC surged to $120,000 following a 9% weekly rally, while gold gained 2.9% to reach $3,900. The shutdown has resulted in over 90% of SEC staff being furloughed and left the CFTC operating with minimal personnel. Markets responded positively to the shutdown as investors now view a 25 basis point Federal Reserve rate cut later this month as nearly certain, following an unexpected drop in U.S. private payrolls and delays in crucial economic data releases. "Traders have lacked immediate catalysts, evidenced by subdued commitment following the FOMC meeting, even as gold and equities have posted strong gains. However, the broader trend remains higher as we move into a rate-cutting cycle," stated Jake Ostrovskis, Head of OTC Trading at Wintermute. Lower interest rates typically enhance the appeal of risk assets like cryptocurrencies, coinciding with a month that has historically shown strong performance for digital assets. "October has historically been a bullish month for Bitcoin, and early signs suggest this year may be no exception," noted Gadi Chait of Xapo Bank. "Far from being a speculative outlier, bitcoin continues to demonstrate its ability to defy expectations and establish itself as a digital asset with lasting power." On-chain data supports this optimism. According to CryptoQuant, apparent bitcoin demand has increased by approximately 62,000 BTC monthly since July, primarily driven by ETF investments and whale accumulation. ETF holdings alone surged 71% during fourth-quarter 2024. The decentralized finance sector continues its expansion as well. "Over the past month, DeFi's share of trading activity has been climbing significantly, expanding both the market and our opportunities," commented dYdX Labs President Eddie Zhang. "A significant driver of this shift is renewed energy and participation from Asian markets. We believe DeFi is beginning to fulfill its long-standing potential, with market adoption accelerating accordingly." Looking forward, cryptocurrency markets anticipate several potential catalysts: potential delays in ETF decisions for altcoins including SOL and XRP due to the shutdown, and Ethereum's approaching Fusaka upgrade. Market participants should remain vigilant for these developments.