- A possible U.S. government shutdown could delay the release of jobs data that Bitcoin traders rely on to predict Federal Reserve rate moves.
- Bitcoin has risen above $114,000, but is still 0.7% below its value from two weeks ago as uncertainty continues.
- Past government shutdowns have affected Bitcoin differently, with a 14% price increase in 2013 and a 6% decrease in 2018-2019.
- Analysts say the delay of economic data could lead to increased volatility in crypto markets until the shutdown is resolved.
- Experts note Bitcoin is currently in a period of growing demand, similar to trends seen during the 2013 shutdown.
A potential shutdown of the U.S. government could postpone the release of an important jobs report due Friday, a key data point used by Bitcoin traders to predict whether the Federal Reserve will cut interest rates. If Congress does not approve funding before the federal fiscal year ends at midnight on Tuesday, several “non-essential” government functions, including economic data collection, will pause.
At the time of writing, Bitcoin has climbed above $114,000. Data from CoinGecko shows the price is 3.8% higher over the past day but remains 0.7% below levels from two weeks prior.
Bitunix analysts stated in a note that expectations for interest rate cuts support risk assets like Bitcoin. However, they warned that market “bubble concerns and political risk amplify short-term volatility,” adding, “In the short term, bubble fears and shutdown risk heighten fragility, making sharp ‘drop-and-rebound’ swings more likely.” John Reid, head of Macro and Thematic Research at Deutsche Bank, wrote that “payrolls Friday could be the first high profile victim of a potential government shutdown if Congress is unable to reach an agreement” and pointed to delays to jobs reports during the 2013 shutdown.
Economic report delays impact crypto trading because investors monitor government data to anticipate the Federal Reserve’s interest rate moves. If a shutdown takes place, the Bureau of Labor Statistics will postpone the jobs report until funding resumes, which could increase price swings.
Nicolai Sondergaard, a Research Analyst at Nansen, noted that a shutdown could spike short-term volatility in crypto markets. He added, “I also wouldn’t be surprised if the potential effect of a shutdown hit broader financial markets before it even happens, if at all.”
Historical data shows mixed results for Bitcoin in past shutdowns. During the 16-day shutdown in October 2013, the price of Bitcoin climbed 14% from $132 to $151. By contrast, during the 35-day shutdown from December 2018 to January 2019, Bitcoin dropped 6% from $3,802 to $3,576.
Julio Moreno, head of research at Cryptoquant, said that in 2013, “the demand for Bitcoin was growing strongly as it entered the final stage of the bull cycle,” while in 2018, interest was declining. Moreno said Bitcoin now appears stronger, with increasing demand similar to 2013, stating, “Bitcoin demand is growing, as we enter Q4, which is typically a positive season in terms of price performance.”
Prediction market participants have also grown more doubtful that the Federal Reserve will enact two rate changes in 2025, with skepticism rising from 40% to 75% this month.
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