Bitcoin Rises 12% On US Shutdown And Fed Rate Cut Hopes
Bitcoin Surges 12% As US Shutdown And Fed Rate Cut Bets Drive Market Momentum
Bitcoin (BTC) posted a strong rebound last week, rising 12.14% and erasing September’s sluggish losses. Unlike previous rallies driven by altcoins, this surge was led primarily by Bitcoin itself.
Major altcoins such as Ethereum (ETH) and Solana (SOL) rose only modestly, gaining 12.9% and 13.24% respectively, while Bitcoin outperformed, hitting a new all-time high near $125,500 over the weekend.
Key Drivers: US Government Shutdown, Weak Jobs Data, And Fed Expectations
Bitcoin’s rally began shortly after the US government shutdown took effect at midnight Wednesday (EST), halting federal spending and leaving thousands of government employees temporarily unpaid.
Market participants saw the shutdown as a major source of economic uncertainty, fueling expectations that the Federal Reserve would cut interest rates at its upcoming FOMC meeting in late October.
According to CME Group’s FedWatch Tool, the probability of a rate cut jumped from 89% to 98% by September 30. Bitcoin, trading near $112,000 at the time, began to rally sharply following the news.
Further momentum came from disappointing labor data. The ADP Employment Report for September showed -32,000 jobs, far below the market forecast of +50,000, reinforcing the view that the US job market is weakening.
The market is now pricing in four additional rate cuts by June next year. Meanwhile, the Republican Party announced plans to lay off federal workers, a move seen as an effort to achieve the workforce reductions that former President Donald Trump was unable to complete during his term. If successful, the current 4.3% unemployment rate could rise sharply, further pressuring the Fed to ease monetary policy.
Japan’s Political Shift Adds Fuel
Political developments in Japan also contributed to Bitcoin’s momentum. On Friday, Sanae Takaichi was elected leader of Japan’s Liberal Democratic Party, making her the likely next Prime Minister.
Takaichi is expected to pursue looser monetary policies, weakening the yen. Her stance contrasts with outgoing Prime Minister Fumio Kishida, who had leaned toward tightening to combat inflation.
As investors anticipated global liquidity expansion, Bitcoin broke above $125,500, setting a new all-time high by the weekend.
Key Events To Watch This Week
- Monday: Conference Board Employment Trends Index.
- Tuesday: New York Fed Consumer Expectations Survey.
- Wednesday: September FOMC minutes and a 10-year Treasury auction.
- Thursday: Fed Chair Jerome Powell’s speech and a 30-year Treasury auction.
While several macro events are lined up, analysts believe none are likely to shake the market’s firm conviction that the Fed will cut rates in October.
Instead, developments in Congress over the government shutdown—and the Trump administration’s stance on federal workforce cuts—could continue to drive market volatility.
Disclaimer: The content above reflects the author’s personal views and does not represent any official position of Cobic News. The information provided is for informational purposes only and should not be considered as investment advice from Cobic News.